A Loan

forex

Hello,

I am writing to you on behalf of an Russian construction company called InterStroi who does pipeline related works for Transneft JSC (This company owns lion part of all oil pipelines in Russia, http://eng.transneft.ru/ ).
To start new project with Transneft, InterStroi is looking for a loan in one of the European countries.
Reasons for loan:
1) Russian banks has very high loan percent;
2) Contract works are get paid after the work was completed (there are 4 complete contacts with Transneft);
3) Company has own funds, but they will be available only in October ;
4) There is a requirement to complete the project before the winter as this kind of work can’t be performed during the cold time.

Thus I would be very grateful if you could give me any advise who could provide such loan or any other thoughts.

Regards,
Dmitry

gordongekko

I recently was contacted by a Nigerian prince who wants me to help him get money out of the country. Maybe he would be a good contact for you.

forex

Thanks, I was also contacted by the same prince about 12 years ago and I should still have his contacts :-)
But question is serious, if you don't know the process of obtaining loan in the European Country, please don't write.

gordongekko

forex wrote: »

Thanks, I was also contacted by the same prince about 12 years ago. :-)
But question is serious, if you don't know the process of obtaining loan in the European Country, please don't write.

you have no chance of getting the loan in Ireland and next to none in the rest of Europe.

forex

I know about Ireland (I already spoke to AIB). Please be more specific about the "Rest of Europe".
I also know that some European Banks banks do provide such loans to Russian Businesses, but there is a middle man between the the bank and the company. Unfortunately I don't know all details, but trying to avoid risks related to that "middle man".

gordongekko

forex wrote: »

I know about Ireland (I already spoke to AIB). Please be more specific about the "Rest of Europe".
I also know that some European Banks banks do provide such loans in Russia, but there is a middle man between the the bank and the company. Unfortunately I don't know all details, but trying to avoid risks related to that "middle man".

if by some odd chance you got someone to give you the loan they would charge you at a bridging loan rate which would be at a similar rate to what us available in Russia.

Either get the loan in Russia or forget about it would be my advice to you.

forex

We were offered a loan with middle man for 4% a year, surely it does not include some bonuses in that chain. Loan cost in Russia is about 20%.

Ruble in Russia has hard government control and overvalued. This means that even with the current level of inflation conversion to/from rubles will not make negative value.

Voltex

This is VC territory my friend. May I suggest you have a verifiably firm business plan in place.

forex

Sure, a complete business plan and references of 4 previous Transneft contracts will be provided.
Question is which financial institute would review them ... ?

Voltex

forex wrote: »

Sure, a complete business plan and references of 4 previous Transneft contracts will be provided.
Question is which financial institute would review them ... ?

Your looking to benefit from a carry trade on euro vs rouble and lower relative interest rates to finance this project? Why not look to Japanese or Swiss banks?

BTW why is there no information about InterStroi online?

forex

Any bank takes into account conversion rates and inflation. This is why I explained that there no is risk here. Government allows Ruble fluctuation only in some "fluctuation corridor":

"The corridor system that was introduced on July 6 was instrumental in stabilizing the ruble in and after mid-1995. The Russian government introduced the currency corridor system as the first step in its preparations for fixing the ruble’s exchange rate to ensure stability of the currency. The corridor system is designed to limit the ruble’s fluctuations within a narrow range by limiting its upper and lower limits."
Source: www.esri.go.jp/en/tie/russia/russia4-e.pdf

Looking at the corridor & inflation level ( http://inflationinrussia.com/ ) we can see that Ruble is very overvalued, with inflation level of 44.29% for the last 5 years , conversion Ruble rate to/from Euro stays within the allowed narrow range: http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-rub.en.html and did not increase by the same 44.29% or more. To be more specific, 5 years ago 1 Euro cost 45 rubles. If we assume that there is no government control, and taking into account the inflation level, today 1Euro would cost 45x1.4429=64.9 Rubles. But the current price is 43Rubles for 1 Euro.

As for your question regarding benefiting from trades, the company is not looking for such benefits, they just do a construction work and looking for a finance for this project now, because if they start it in October they will not be able to complete it by the cold months and would have to take a 3 months brake.

Last Friday evening I have sent 2 requests to UBS & Credit Swiss. Its hard to find the right person to contact ... will see what reply I'll get. Thank you for the advice about Japanese banks.

Regarding info about Interstroi in the internet. Its a common in Ireland that nearly every barber has own website. However in Russia they do a business differently, its all about business connections in the area where all players know each other, having website in this situation will not make any benefits (this is what they think). However you can still find information about InterStroi in the Russian internet.

Voltex

OP..you seem like a genuine guy and have knowledge of international finance, but ill assume that anybody or institution will be looking at risk here. I'm not in banking, finance or VC (in fact I run a food manufacturing plant), but my path does come across people who have done business in Russia. In fact I was talking recently to a guy who was installing large processing equipment into a Moscow factory. He was strongly advised before hand that he should seek 50% upfront as a deposit, but then to make sure the 50% was 100% of his cost + margin...so without saying anymore you can see where I'm going on this.

There's no shortage of available capital around the World..in fact there's so much looking for a home, we are seeing the effects in the US right now( probably the only country in the World capable of sucking up so much available capital), but where there's questionable risk institutions tend to back off...hence my suggestion of seeking out venture capital.

forex

Indeed there are many ways to lose money in Russia without having a proper advice or without knowing business traditions, same like very difficult to earn money in Ireland without having good connections.
Thank you for your valuable advices. In search for a Venture Capital I found one in Ireland: www.irishinvestmentnetwork.ie , I hope they will review the offer.
Regards,
Dmitry

arrowloopboy

forex wrote: »

We were offered a loan with middle man for 4% a year, surely it does not include some bonuses in that chain. Loan cost in Russia is about 20%.

Ruble in Russia has hard government control and overvalued. This means that even with the current level of inflation conversion to/from rubles will not make negative value.

What interest rate do these banks pay out ?

forex

arrowloopboy wrote: »

What interest rate do these banks pay out ?

Saving accounts are form 8.5% up to 11.5%