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Rusal Sees Stronger Ruble, Higher Aluminum Prices In Short Term
Feb 25,2011 09:22CST
industry news

MOSCOW, Feb 24, 2011 (Dow Jones Commodities News via Comtex) -- Russian aluminum giant United Co. Rusal (0486.HK) sees the ruble strengthening in the short term and expects prices for aluminum to rise in response to the instability in the Middle East and North Africa.

The company's Chief Financial Officer Oleg Mukhamedshin told Dow Jones Newswires he excepts the ruble to be stronger in the short term and flat in the medium term "with higher demand for ruble-nominated securities and debt instruments and, consequently, lower yields on them."

He noted that the company is taking advantage of that situation, borrowing in rubles, partly to refinance its dollar-denominated debt.

Rusal has already placed a RUB15 billion ($510 million) bond and may place another bond of the same amount by May.

"As part of out revenue is in rubles we may comfortably borrow something in rubles, if market conditions are right," he said.

Although the company's main production is based in Russia, and salaries are paid in rubles, prices for raw materials are tied to the dollar.

He said earlier the company is planning to refinance $5 billion of its debt this year, some $3 billion will be borrowed through bank loans, with an additional $1 billion in eurobonds and $1 billion in ruble bonds, with ruble bond portion hedged using a dollar swap instrument.

Mukhamedshin also said he expects the instability in the Middle East and North Africa to drive up prices for aluminum "as investors see a risk of production disruptions in the region."

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