Market rate on loans. What are the average interest rates on loans to legal entities

To meet their needs for financial resources, enterprises can attract various types of loans. Efficient use of loans allows you to expand the scale of activities, increase profitability equity and, ultimately, the value of the firm. In economic terms, any loan is an unconditional obligation of the subject to return the amount received in debt by a certain date and pay its owner a predetermined remuneration in the form of interest for the use of funds.
Sources and forms of debt financing are quite diverse. The following is a brief description of the essence and features of the most popular forms of loans used in domestic and world practice.
Debt financing is based on the following fundamental principles that determine its essence:
- return;
- payment;
- urgency.
The principle of repayment reflects the need for the borrower to fully reimburse the amount received (the principal amount of the debt) on time. In real practice, the fulfillment of this requirement by the borrower depends on the stability of the financial results of its activities (sales proceeds, profit, etc.), as well as on the quality of the loan security.
The principle of payment expresses the obligatory payment by the borrower of interest for the right to use the resources provided by the creditor for a certain time. Interest rates on loans include the market value of money depending on the terms and volumes, as well as premiums for risk, liquidity, etc. required by lenders.
The principle of urgency characterizes the period of time for which borrowed funds are provided and after which they must be returned to the creditor.
In addition to these principles, some forms of loans provide for the need to ensure the return of funds provided and the corresponding interest payments.
In general, debt financing, regardless of the form of attraction, has the following advantages:
- fixed cost and term, providing certainty when planning cash flows;
- the size of the fee for use does not depend on the income of the company, which allows you to keep excess income in the event of their growth at the disposal of the owners;
- the ability to raise the profitability of own capital through the use of financial leverage;
- payment for use is deducted from the tax base, which reduces the cost of the attracted source and the capital of the company as a whole;
- no interference and obtaining rights to manage, etc.
The general disadvantages of debt financing include:
- obligatoriness of the promised payments and repayment of the principal amount of the debt, regardless of the results of economic activity;
- increase in financial risk;
- the presence of restrictive conditions that may affect the economic policy of the company (for example, restrictions on the payment of dividends, attraction of other loans, mergers and acquisitions, pledge of assets, etc.);
- possible collateral requirements;
- restrictions on terms of use and volumes of attraction.
In addition to the general, each specific form of debt financing may have its own advantages and disadvantages arising from its specifics.
The main forms of debt financing are: bank loan (bank loan), bond issue (bond), rent or leasing (leasing).
Bank loan
Credit (from Latin credo - “I believe”) is the classic and most well-known form of debt financing for enterprises.
The subject of lending is a legal entity or an individual who claims to receive financial resources on the terms of a loan and meets the requirements set by creditors (usually commercial banks) to borrowers.
The availability of loans for legal entities depends on various factors: the macroeconomic situation, the organizational and legal form of doing business, industry, type of activity, financial condition, creditworthiness, etc.
The object of lending is the purpose for which the borrower needs funds. When obtaining a loan, enterprises usually pursue the following goals:
- financing working capital(current activity);
- financing investment projects(capital investments);
- refinancing of previously attracted loans;
- financing of mergers and acquisitions, etc.
Loans for replenishment of working capital are short-term (up to 1 year). As a rule, their receipt takes a little time (up to two weeks). In most cases, when providing them, banks do not require collateral in the form of fixed assets. Such security is the future earnings of the enterprise or purchased inventory (subject to their liquidity). However, it is difficult for banks to control the safety of stocks in the amount necessary to secure a loan, and for various reasons, enterprises may need to reduce them and put them into circulation. Therefore, such a loan is easier to obtain for enterprises with a good business reputation and stable financial condition. Pro
programs for credit financing of working capital exist in almost every Russian bank.
Financing capital investments is a more complicated procedure, since these purposes usually require significant amounts of funds, and credit terms exceed 1 year. The provision of collateral to the bank for such loans is a mandatory requirement, regardless of the scale of the enterprise, its reputation, financial performance, etc. As a separate area, we can single out the use of bank loans to finance investment projects launched from scratch .
Refinancing previously borrowed funds - obtaining a new loan on more favorable terms and repaying with its help a debt attracted on less favorable terms. Refinancing operations in the Russian Federation, on the one hand, have an objective basis in the form of lower interest rates on loans, and on the other hand, they are constrained by their short terms, which reduce the flexibility and efficiency of this operation.
Financing transactions for mergers and acquisitions involving borrowed funds - operations characterized by significant risk. Banks issuing loans for these purposes seek to compensate for their risks through increased requirements for collateral and higher interest rates.
It is necessary to distinguish between a loan and a line of credit. When a loan is granted, the client's loan account reflects the entire amount issued to him, on which interest is charged in accordance with the terms of the loan agreement, regardless of the actual use of the allocated funds by the borrower. An appropriate loan agreement is concluded with the borrower. The loan is granted either by a one-time transfer of funds to a settlement or foreign currency account, or by their transfer to these accounts according to an agreed schedule, indicating specific dates or periods of transfer determined in the terms of the agreement.
In the case of a credit line, the loan account reflects the actual debt (actually used by the borrower funds), on which interest is charged. At the same time, the borrower is set a limit on credit resources, within which he can use them. The credit line can be renewable and non-renewable. A non-revolving credit line is opened to make various payments related to one or more contracts or a consignment of goods, regular financial and business transactions, as well as to cover occasional temporary gaps in the payment turnover of enterprises. A framework credit line is opened to a borrower to pay for individual deliveries of goods under contracts implemented over a certain period, as well as to finance the stages of implementation of costs associated with the implementation of targeted programs. For each delivery (or stage of the target program) a separate loan agreement is concluded within the framework of the general agreement on opening a framework credit line. Collateral is issued for each loan agreement.
Financial practice has developed various forms credits. The most common is the so-called urgent, or ordinary, loan provided by the bank to the client for the intended use for a fixed period at a certain percentage.
Overdraft - a form of lending that provides the client with the opportunity to receive a short-term loan, as a rule, without collateral, in excess of the balance of funds on the settlement account within the limit established for it, the value of which depends on the credit history, the stability of average monthly turnover bank and other factors. The interest rate on an overdraft is usually higher than on a regular secured loan.
An on-call loan is provided to the borrower without specifying the period of its use (within the framework of short-term lending) with the latter's obligation to repay it at the first request of the lender. When repaying this loan, a grace period is usually provided (according to current practice - up to three days).
A revolving (automatically renewable) loan is provided for a certain period, during which both a phased “selection” of allocated funds and a phased partial or full repayment obligations on him. The funds contributed to repay obligations can be borrowed again by the enterprise during the period of validity of the loan agreement within the established credit limit. Payment of the remaining outstanding amount of principal and interest on it is made upon expiration of the term of the loan agreement. The advantage of this type of loan is the minimum restrictions imposed by the bank, although the interest rate on it is usually higher.
An investment loan is a long-term loan (or credit line) for the implementation of a project or program at an operating enterprise. Therefore, along with the typical requirements for the borrower's creditworthiness and security, when issuing such a loan, the bank carefully studies the business plan of the project (program) for which funds are requested.
A mortgage loan can be obtained from banks that specialize in issuing long-term loans secured by fixed assets or the property complex of enterprises as a whole. An enterprise pledging its property as a pledge is obliged to insure it in full in favor of the bank. At the same time, the property pledged in the bank continues to be used by the enterprise. It should be noted that mortgage credit lending enterprises has not yet received proper distribution in Russian Federation.
A syndicated loan is a loan organized by a pool of lenders for one borrower in order to finance large-scale economic programs or implement large investment projects. It is characterized by the following main features:
- joint responsibility - the pool of creditors acts in relation to the borrower as a single party, all creditors bear joint responsibility to the borrower;
- equality of creditors - none of the banks has advantages in debt collection, and all funds received to repay the loan or from the sale of security are divided between them in proportion to the amount provided;
- unity of documentation - all contracts are multilateral;
- the unity of information for all participants in the transaction.
The variety of forms and conditions for obtaining loans determines the need to develop a specific policy for managing this process at enterprises. The process of obtaining a loan can be divided into several stages.
The first stage is the determination by the borrower of the need for credit resources and loan parameters (type of loan, volume, term, acceptable interest rate, etc.), as well as the economic justification for their use.
Financial resources can be attracted at a time and periodically - at certain stages of development of the financed project. For example, in construction, the receipt of credit funds may be associated with the terms of payment for the services of various contractors. In this case, it is advisable to break the loan into separate tranches so as not to pay the bank for the funds raised during the period when the company did not actually use them.
Particular attention should be paid to the business case for borrowing needs. According to the majority of experts and specialists of commercial banks, the problem of the inability of borrowers to submit a high-quality business plan or a feasibility study (FS) remains an urgent problem for Russian enterprises. On the one hand, this is due to erroneous ideas about the degree of importance of these documents when making a decision by the bank, on the other hand, the low professional level of specialists responsible for their preparation. A frequent consequence of the poor quality of justification is an increase in the cost of a loan (interest rate) or even a bank's refusal to provide borrowed funds.
At this stage, you should also pre-select the subject of collateral, based on your own ideas about the value of its value.
The second stage is the choice of a bank and preliminary consultations with a potential creditor. At this stage, the company needs to make a choice in favor of a particular bank and determine the most significant terms of the loan agreement.
When choosing a bank, one should take into account the mandatory economic standards for its activities established by the Central Bank of the Russian Federation. In addition to liquidity and reliability, the analysis of standards allows you to determine the maximum amount of funds that can be provided by this bank on a loan. The norm limiting the amount of loans provided, in standard cases, is 25% of the bank's equity capital. If the borrower is a shareholder of the bank, then the maximum is limited to 20%.
An almost obligatory condition for the provision of a loan by domestic banks is the availability of timely and complete fulfillment of obligations by the borrower.
According to the legislation of the Russian Federation, the following can act as collateral for a loan:
- pledged government securities and securities of the Savings Bank of Russia;
- pledged securities of constituent entities of the Russian Federation within the limits of risk established for them;
- liquid securities of banks pledged as collateral within the risk limits established for counterparty banks;
- pledged securities of corporate issuers within the risk limits established for them;
- guarantees of the Ministry of Finance of Russia within the established risk limit;
- guarantees of subjects of the Russian Federation or municipal formations within the limits established for them;
- pledged vehicles, equipment, inventory items;
- pledged real estate objects;
- bank guarantees within the risk limits established for counterparty banks;
- guarantees of solvent enterprises and organizations;
- Precious metals to be pledged in standard and/or measured ingots with obligatory storage of the pledged property in a bank.
The main requirement for collateral is that its market value must be sufficient to compensate the bank for the principal debt on the loan (loan amount), all interest in accordance with the agreement for 1 year, as well as possible costs associated with the sale of collateral (penalties, fines, legal and other the costs of foreclosing the security).
There are several generally accepted ways to assess the value of collateral, which is determined on the basis of:
=> purchase (book) cost with a decreasing coefficient, for equipment - minus depreciation for the crediting period. Reducing coefficients for various types of property vary from 0.5 to 0.7;
market value based on the results of an expert assessment. Here, too, reduction factors are often applied. At the same time, most Russian banks require that the assessment be carried out by companies with which they have established partnerships. In some banks, the examination is carried out by their employees;
= ^ the amount specified in the property insurance contract, transferred as collateral.
The costs associated with the sale of collateral, as a rule, are estimated at 10 to 20% of the loan amount, depending on its type.
The second requirement for collateral is the execution of legal documentation in such a way that the time required for its implementation in the event of a loan default does not exceed 150 days. Obviously, the property or rights transferred as collateral must be liquid in relation not only to market demand, but also to current legislation.
The borrower is also obliged to provide documents confirming:
- powers of the persons signing the security agreement;
- his right of ownership to the property transferred as collateral;
- no encumbrance on property (it is not under arrest, not pledged to another bank);
- the legality of the disposal of the premises where the pledge is located (if goods, finished products, raw materials are transferred as pledge).
It should be noted that, in addition to the basic requirements for collateral established by the Central Bank of the Russian Federation, commercial banks may establish additional requirements based on their own business practices.
As a result, the total amount of collateral in practice exceeds the amount of the loan received. Insufficient collateral is the most typical and main problem faced by enterprises in the process of obtaining a loan.
To protect against non-repayment of placed loans, any bank forms reserves that are used to write off bad debts. The amount of such deductions depends on the quality of the loan.
To determine the amount of reserve deductions, the bank classifies all loan and equivalent debt according to established criteria and their features into four risk groups. Standard loans require a reservation of 1% of the amount outstanding on the loan; non-standard - 20%; dubious - 50%; hopeless - 100%.
In this case, the classification of loans is carried out according to the following criteria:
- quality of credit collateral;
- the number of days of delay on the loan and interest;
- the number of renewals of the loan agreement (i.e., any changes made to the agreement by agreement of the parties);
- the quality of these re-registrations (to what extent the changes made have improved the terms of the contract for the borrower).
Obviously, any bank seeks to minimize the cost of reserves, that is, it prefers that all loans granted are standard.
At the third stage, when a partner bank is selected and the approximate terms of the loan are agreed upon, the company sends it all the necessary documentation: legal documents, financial statements, feasibility studies, business plans, etc. The composition of the requested documents depends on the specific parameters of the loan and bank requirements. The duration of this stage is significantly influenced by the presence or absence of the entire volume required documents.
As already noted, bank specialists often note the low quality of business plans and feasibility studies of projects provided, so a serious approach to their preparation can significantly simplify the procedure for obtaining a loan. Do not forget about the importance of the human factor. For example, the reputation and level of professionalism of management play a significant role in the final decision of the credit committee.
At the fourth stage, after the transfer of all necessary documentation to the bank, the procedure for assessing the borrower begins.
The procedure for assessing the bank's creditworthiness and risks of potential customers is regulated by the regulations of the Central Bank of the Russian Federation (Instruction of the Central Bank of the Russian Federation No. 62a "On the procedure for the formation and use of a reserve for possible losses on loans", Regulation No. 54 "On the procedure for (placement) by credit institutions of funds and their return (repayment), etc.). In addition, each bank has its own valuation methods.
Typically, banks conduct a comprehensive examination of credit applications and borrowers. In this case, three main groups of factors are evaluated: legal, financial and non-financial.
In the process of analyzing the legal aspects, the legal service checks the constituent documents, the powers of the persons who will sign agreements with the bank, and documents on collateral. When receiving a large loan, the borrower must provide all the necessary decisions of the authorities on the completion of a large transaction (over 25% of assets as of the last reporting date). If the loan is intended for financing an investment project, for settlements under specific agreements or contracts, the bank will definitely conduct a legal examination of these documents.
The financial assessment is carried out according to the data of the business plan and reporting of the enterprise. Each bank applies its own assessment methodology, but the indicators used in this are almost the same everywhere - liquidity ratios, solvency, profitability, etc. In practice, many banks are also guided by the scale of economic activity, criteria estimates of which are sales proceeds, market share, etc. The financial and legal ties of a potential borrower are also studied: main partners (suppliers, buyers, lenders, landlords, tenants), founders, subsidiaries.
Non-financial factors include the business reputation of the enterprise, its credit history and the quality of management.
The procedure for granting loans in all banks is approximately the same - representatives of the bank's services (credit, legal departments, security services) consider the submitted documents and draw up their conclusions. If they are positive, the issue of granting a loan is submitted for consideration by the credit committee of the bank. After the approval of the credit committee, a loan agreement is concluded with the enterprise.
Currently, lending to the real sector is the main operation of Russian banks. At the same time, domestic enterprises experience a steady shortage of credit resources, especially for financing investments.
As the main reasons hindering the growth of investment lending, analysts and experts note an acute shortage of short-term borrowed resources (for turnover), the inability to meet the investment needs of large borrowers due to low capitalization and a weak resource base of commercial banks, as well as high level of risk of long-term loans, which consists of several components:
- a small number of highly effective and carefully designed investment projects, especially for medium and small enterprises;
- low level of management of enterprises and the reliability of their reporting, forcing them to find additional ways to control the borrower (which results in the provision of investment loans, as a rule, only to affiliated structures);
- low profitability of projects in the real sector (according to surveys of enterprises, the maximum allowable rate for capital investments is on average 8-9% per annum) puts banks at risk of shortfall in profits, etc.
In turn, enterprises name high interest rates(62% of the respondents). Other constraints noted include excessive collateral requirements (53%), insufficient maturity (38%) and volumes (17%) of lending.
Let's sum up some results. In general, debt financing through bank loans in the Russian Federation has the following advantages:
- flexibility of the terms of provision (the contract can provide for the specific requirements of both the borrower and the lender), as well as the possibility of their revision if necessary;
- relatively small time and money spent on attraction (from two weeks to two months);
- confidentiality of the transaction, the absence of strict requirements for the disclosure of information about the business, etc.
The disadvantages of credit financing in the Russian Federation include:
- low capitalization and the predominance of short liabilities of commercial banks, as well as the strict requirements of the Central Bank of the Russian Federation for the formation of reserves for possible non-payments, making it impossible to obtain significant amounts of funds on a long-term basis (more than 90% of Russian banks are unable to issue a loan over $10 million .US);
- high interest rates due to inflation, as well as significant macro and microeconomic risks;
- collateral requirements (more than 100% of the loan amount);
- low profitability, creditworthiness and unsatisfactory financial condition of many enterprises, etc.
Despite the obvious advantages and the general downward trend in interest rates, cheap and long-term bank loans are still inaccessible to most Russian enterprises.
Under these conditions, in order to finance large investment projects, the most famous enterprises are forced to resort to borrowings abroad.
Bond issue
Another popular form of debt financing in domestic and world practice is the issuance of bonds.
According to the legislation of the Russian Federation, bonds can only be placed by business entities (LLC, CJSC, OJSC) by decision of the board of directors (supervisory board), unless otherwise provided by the charter. The decision to issue bonds must determine the form, terms and other conditions for their circulation and redemption.
Issued bonds must have a nominal value. At the same time, the nominal value of all issued bonds cannot exceed the size of the authorized capital of the company or the value of the net assets of its guarantor. Issue of ob-bonds is allowed only after full payment of the authorized capital of the company.
The issue of bonds without collateral is allowed not earlier than the third year of the existence of a business entity and subject to the proper approval by this time of its two annual balance sheets.
Over the past few years, corporate bonds have become a popular instrument of debt financing and attraction of investment resources for both large and medium-sized enterprises. If in 2004 the volume of new issues amounted to about 187 billion rubles. (80% higher than in 2003), then in 2009 the companies attracted 380 billion rubles. The share of corporate bonds in the total volume of investments in fixed assets amounted to 6% at the end of the year. At the same time, almost all sectors of the national economy are represented on the market.
However, despite the obvious successes and prospects for the development of this instrument, the scale of the Russian bond market is significantly inferior to developed countries. Thus, the corporate bond markets of the leading European countries exceed the Russian one by 30-50 times. The total capitalization of the corporate bond market in the United States is $3.5 trillion. According to some estimates, up to 80% of the debt financing of American companies comes from bonds.
At the same time, bonded loans give domestic enterprises tangible advantages compared to bank loans and promissory notes, since they allow raising funds at a rate of 7 to 15% per annum for a period of 3 years or more, without requiring collateral.
In general, the following advantages of bonded loans can be distinguished, which make it possible to:
- increase the terms of borrowings (at present, the terms of circulation of bonds of domestic enterprises are from 3 to 5 years or more);
- to form a public credit history of the issuer, which allows in the future to reduce the cost of borrowed resources and increase the terms of their attraction, as well as enter the international capital markets;
- if necessary, use more flexible forms of security, such as third-party guarantees;
- diversify sources of borrowing by increasing the number of creditors (investors), which reduces the cost, as risks are reduced and dependence on one creditor is eliminated;
- promptly manage the debt structure by conducting transactions in the secondary market;
- prepare conditions for the public offering of the company's shares, etc.
However, the issue and placement of bonds cost the enterprise more than obtaining a bank loan.
Primary costs for the issuance and placement of corporate bonds include:
- tax on transactions with securities - 0.2% (but not more than 100,000.00 rubles) of the nominal value of the issue;
- remuneration of the organizer of the issue - 0.5-0.7% of the loan amount;
- exchange commission - 0.035-0.075% of the loan amount;
- depository's commission - 0.1+0.075% of the loan amount;
- remuneration to the paying agent - up to USD 10,000;
- presentations for investors - up to 20,000 USD.
In general, according to analysts, the average total cost of issuing corporate bonds in the Russian Federation is 1.5-3.5% of the total issue. Therefore, the minimum amount of issuance that makes it worthwhile to raise funds is currently approximately at least $10 million.
In addition, attracting such loans requires a significant investment of time (from 4 months) and organizational preparation.
The issue of bonds also involves the disclosure of information about the activities of the enterprise, which is not always acceptable for Russian business.
Nevertheless, already after the first successful placement of the issue, the enterprise has a real opportunity to attract funds in the future cheaper, in a larger volume and for longer periods. In addition, the issuance of bonds creates a base and serves as a kind of rehearsal for the subsequent public offering of shares.
The process of issuing bonds has many financial and legal nuances, which necessitates the involvement of consultants - professional participants in the stock market, mainly financial institutions (banks, investment companies, etc.), who have experience, as well as the ability to organize and implement the placement of bonds, form a secondary market, make settlements and payments. The largest arrangers of bond issues in the domestic market are Vneshtorgbank, Gazprombank, Rosbank, Alfa-Bank, Uralsib, MDM, Troika Dialog, Renaissance Capital, and others.
The process of making a decision on the placement of bonds includes the implementation of several stages.
At the first stage, the enterprise must decide on the choice of a financial consultant (issue organizer or lead manager). If necessary, in the process of preparing for the placement, the organizer of the issue may create a syndicate of underwriters who will carry out the direct placement of securities among investors. As a rule, the composition of the syndicate includes investment banks that conduct brokerage activities.
At the second stage, the financial consultant helps the company to determine the main parameters of the loan and its structure, based on the needs of the enterprise and the real ability of the market to meet them. Then the preparation and registration of the issue prospectus begins. As a rule, both the issuer and the financial consultant are engaged in information support of the issue.
The third stage is marketing research and search for potential investors. It is expedient to entrust this task to specialized companies that have the necessary experience in successful placement of securities. The qualification of a financial consultant is especially important for attracting large investors. In such cases, there is a practice of holding a "road-show", when a financial consultant or issuer's representatives come directly to the investor and arrange a presentation of the upcoming bond issue.
After the implementation of the above steps, the technical procedure for the placement of bonds begins. In most cases, the underwriter offers the issuer certain guarantees, for example, gives an obligation to buy back any part or all of the issue of securities. As a rule, placement is carried out in the form of an open subscription or auction. Both of these methods have their advantages. The choice is up to the issuer and organizers.
In accordance with the legislation of the Russian Federation, bonds are classified as so-called equity securities. The procedure for their issuance and circulation is regulated by the FFMS. According to the order of the Federal Financial Markets Service of January 25, 2007 No. 07-4/pz-n (with subsequent amendments and additions) "On Approval of the Standards for the Issue of Securities and Registration of Securities Prospectuses", the procedure for issuing shares, bonds and issuer options (hereinafter referred to as - "securities") includes the following steps:
1) making a decision that is the basis for the placement of securities;
2) approval of the decision on the issue (additional issue) of securities;
3) state registration of an issue (additional issue) of securities;
4) placement of securities;
5) state registration of a report on the results of an issue (additional issue) of securities or submission to the registering authority of a notice of the results of an issue (additional issue) of securities.
The decision to issue (additional issue) securities of a business entity is approved by the board of directors (supervisory board) or by the body exercising the functions of the board of directors (supervisory board) in accordance with federal laws. It contains information about the terms and methods of placement of bonds, the placement price and other parameters of the issue. The adopted decision must be approved no later than 6 months from the date of its adoption by the board of directors or the general meeting of shareholders.
The most responsible and time-consuming step is the preparation of the prospectus. The prospectus is approved by the board of directors or the general meeting of shareholders (participants) of the issuer and contains:
- information about the issuer (full name of the issuer and date of its state registration; information about the founders, subsidiaries and dependent structures; list of managers; main activity; position of the enterprise in the market; analysis of the industry and competitors, etc.);
- data on the financial position of the issuer (annual financial statements of the company for the last three years);
- information about previous issues of securities (description of all previous issues, their conditions, methods of placement, etc.);
- information about the securities to be placed (full information about the bonds, including the issue volume at face value and information about the underwriter);
- additional information (restrictions on the circulation of bonds, other features and conditions of the issue, etc.).
As already noted, the preparation of the issue prospectus is carried out with the involvement of financial consultants (underwriters). As a rule, the preparation of the prospectus and other necessary documents takes 1-2 months, after which a set of them is sent for registration with the FFMS.
Note that the registration of the issue prospectus is provided only in the case when the placement of bonds is carried out by public subscription. With a closed subscription for bonds, registration of a prospectus is necessary if the number of their purchasers exceeds 500.
To register a bond issue, the issuer must submit the following set of documents to the FFMS:
- application for registration;
- issuer's questionnaire;
- a copy of the document confirming the state registration of the issuer;
- certificate of the issuer on payment of its authorized capital, signed by the person holding the position (performing the functions) of the sole executive body of the issuer, as well as the chief accountant of the issuer or the person exercising his functions;
- decision to issue securities;
- a copy (extract from) of the decision (minutes of the meeting (session) of the authorized person (issuer's body), which approved the decision on the issue (additional issue) of securities and the securities prospectus;
- copies of the constituent documents of the issuer with all changes and/or additions made to them;
- description of submitted documents;
- a document confirming the payment of a tax or fee for the issue of securities;
- other documents stipulated by the legislation.
Documents for the state registration of the issue of securities must be submitted no later than 3 months from the date of approval of the decision on their issue (additional issue), and if the state registration of the issue is accompanied by registration of the prospectus of securities - no later than 1 month from the date of approval prospectus of securities, unless otherwise provided by law.
State registration cannot be carried out:
- until full payment of the authorized capital of a joint-stock company or a limited liability company;
- if the sum of the nominal values ​​(volume of issue) of the bonds in aggregate with the sum of the nominal values ​​of all outstanding bonds of the issuer being a business entity (i.e. bonds, obligations under which have not been fulfilled), exceeds the amount of its authorized capital or the amount of security provided third parties.
The FFMS is obliged to carry out state registration of a bond issue or make a reasoned decision to refuse state registration no later than 30 days from the date of submission of all documents. However, if the FFMS has comments on the submitted documents, they may be returned for correction. After correcting the identified violations, the FFMS accepts documents for reconsideration. Thus, the registration process may take not 30 days, but a much longer time.
If the FFMS makes a positive decision regarding the registration of a bond issue, the issuer is obliged to provide access to the information contained in the prospectus. He must publish a notice on the procedure for disclosing information in a print periodical with a circulation of at least 50 thousand copies (for example, the newspapers Vedomosti, Kommersant, Izvestia, etc.).
The actual placement of bonds can be carried out no earlier than 14 days after the disclosure of information on the state registration of the issue. The placement of bonds must be completed by the issuer no later than one year from the date of approval of the decision to issue bonds. Funds received in the process of bond placement are immediately credited to the issuer's account. However, from the standpoint of the registering authority, the issue of bonds at this stage is not yet considered completed.
Within 30 days after the placement of bonds (the period of placement is indicated in the decision on the issue of bonds), the board of directors of the issuer must approve the report on the results of the issue of bonds, which is also sent for registration with the FFMS.
After the official disclosure of information, investors have the right to make transactions with the issuer's bonds on the secondary market. Formally, the process of emission is completed.
Further steps to bring the bonds to the stock exchange (RTS, MICEX, SPVB) and include them in the exchange quotation lists depend only on the decision of the issuer and underwriter of the issue. As a rule, the listing of bonds on the stock exchange allows the issuer to expand the circle of their holders and increase the liquidity of the issue, which will lead to a decrease in the cost of subsequent loans.
The general scheme of the process of public placement of bonds in the Russian Federation is shown in fig. 14.1.
Rice. 14.1. Issue of bonds in the Russian Federation
In addition to bonds circulating on the Russian securities market, large Russian enterprises have the opportunity to issue so-called Eurobonds, which are traded on world financial markets. The issuance of Eurobonds is associated with certain preparatory work and significant costs, but it pays off with the ability to attract very significant amounts of financing for long periods at a relatively low interest rate.
Leasing
The needs of enterprises for continuous technical re-equipment, the introduction of new technologies, the expansion of the production of goods and services have led to the emergence of new forms of capital raising, one of which is the use of such an instrument as leasing (leasing).
In general, leasing is an agreement according to which one party - the lessor (lessor) transfers to the other party - the tenant (lessee) the right to use some property (buildings, structures, equipment) for a certain period and on agreed terms.
Typically, such an agreement provides for the tenant to pay a regular fee for the equipment used throughout the entire period of its operation. At the end of the term of the agreement or in the event of its early termination, the property is returned to the owner. However, leasing contracts often provide for the tenant's right to buy the property at a preferential or residual value, or to enter into a new lease agreement.
Currently, in the economic practice of developed countries, various forms of leasing are used, each of which is characterized by its own specific features. The most common of them include:
- operating, or service, leasing (operating lease);
- financial, or capital, leasing (financial lease);
- leaseback (sale and lease back);
- separate, or credit, leasing (leveraged lease);
- direct leasing (direct lease), etc.
It should be noted that all existing types of such agreements are varieties of two basic forms of leasing - operational or financial.
Operational (service) leasing is an agreement, the term of which is less than the full depreciation period of the leased asset (usually from 1 to 3 years). At the same time, the fee stipulated by the contract does not cover the full cost of the asset, which makes it necessary to lease it several times.
The most important distinguishing feature of operating leasing is the tenant's right to early termination of the contract. Such agreements may also provide for the provision of various services for the installation and ongoing maintenance of the leased equipment. Hence the second, often used name of this form of leasing - service. In this case, the cost of the services provided is included in the rent or paid separately.
The main objects of operational (service) leasing include equipment that quickly becomes obsolete (computers, copiers and copying equipment, various types of office equipment, etc.) and technically complex, requiring constant service maintenance (trucks and cars, airliners, railway and maritime transport, construction equipment).
It is easy to see that, in general, the terms of operational leasing are more favorable for the tenant. In particular, the possibility of early termination of the lease allows you to get rid of obsolete equipment in a timely manner and replace it with a more high-tech and competitive one. In addition, in the event of adverse circumstances, the enterprise can quickly curtail this type of activity by returning the relevant equipment to the owner ahead of schedule, and significantly reduce the costs associated with the liquidation or reorganization of production.
In the case of the implementation of one-time projects or orders, operational leasing relieves from the need to purchase and subsequently maintain equipment that will not be needed in the future.
The use of various services provided by a leasing company or equipment manufacturer often reduces the cost of ongoing maintenance and maintenance of the relevant personnel.
The downside of these benefits are:
- higher rent than in other forms of leasing;
- requirements for making advances and prepayments;
- the presence in the contracts of clauses on the payment of penalties in case of early termination of the lease;
- other conditions designed to reduce and partially compensate for the risk of property owners.
Currently, this form of leasing has not received proper development in the Russian Federation. Moreover, according to the legislation, operating leasing is treated as a short-term lease and is regulated by the Civil Code of the Russian Federation. Accordingly, he does not fall under the Law "On Leasing" and the benefits provided for by this Law do not apply to him.
Financial leasing is an agreement providing for the special acquisition of an asset into ownership, followed by leasing (temporary use) for a period close to its useful life (depreciation). The payments under such an agreement generally provide the lessor with full reimbursement of the costs of acquiring the asset and providing other services, as well as a related profit.
After the expiration of the transaction, the lessee can return the asset to the owner, enter into a new leasing agreement or buy the leased object at residual value.
The objects of financial leasing include real estate (land, buildings and structures), as well as long-term assets industrial purpose. Therefore, it is also often called capital lease.
Unlike operational, financial leasing significantly reduces the risk of the owner of the property. In fact, its terms are largely identical to the agreements concluded when obtaining bank loans, since they provide for:
- full or almost full repayment of the cost of equipment;
- payment of a periodic fee, including the cost of equipment and the income of the owner (actually - the main and percentage parts);
- the right to declare the tenant bankrupt in case of his inability to fulfill the concluded agreement, etc.
Financial leasing is the basis for the formation of other forms of long-term lease - returnable and separate (with the participation of a third party).
Leaseback is a system of two agreements in which the owner sells the equipment into the ownership of the other party while concluding a long-term lease agreement with the buyer. Commercial banks, investment, insurance or leasing companies usually act as buyers here. As a result of such an operation, only the owner of the equipment changes, and its user remains the same, having received additional funding at its disposal. The investor, in fact, lends to the former owner, receiving ownership of his property as security. Such operations are often carried out in a business downturn, in order to stabilize the financial position of enterprises.
Another type of financial leasing is its separate form, which provides for the participation in the transaction of a third party - investors, which are usually banks, insurance or investment companies. In this case, the leasing company, having concluded a preliminary contract for the long-term lease of some equipment, acquires its ownership, paying part of the cost at the expense of borrowed funds. As collateral for the received loan, the acquired property (as a rule, a mortgage is issued on it) and future lease payments, the corresponding part of which can be paid directly by the tenant to the investor, are used. At the same time, the leasing company enjoys the benefits of a tax shield that arises in the process of depreciation of equipment and repayment of debt obligations. The main objects of this form of leasing are high-value assets such as mineral deposits, equipment for extractive industries, construction equipment, etc.
With direct leasing, the lessee enters into a leasing agreement directly (directly) with the manufacturer or with a leasing company created under him. The largest manufacturers - leaders of the world market, such as IBM, Herox, OATX, VMLU, SaterShag, etc., are the founders of their own leasing companies, through which they carry out
movement and marketing of its products in many countries of the world. Domestic enterprises do the same. Many names of Russian leasing companies speak for themselves: KamAZ-Leasing, Ilyushin Finance Co, Tupolev, etc.
Sometimes leasing is not carried out directly, but through an intermediary. At the same time, the agreement provides that in the event of temporary insolvency or bankruptcy of the intermediary, leasing payments must go to the main lessor. Such transactions are called "subleasing" (subleasing).
The use of subleasing transactions can be beneficial for financing the assets of enterprises that are part of a holding, concern, etc. etc., as it allows the management or parent company to optimize, control and close cash flows. Instead of direct lending or subsidizing subsidiaries, it can create a leasing company that, at the request of enterprises and divisions, acquires the required assets and supplies them to customers, then monitors the timeliness of receipt of leasing payments, accumulates them and transfers them to the main lessor - the parent company, and also supervises the intended use of the equipment and its maintenance.
The interpretation of leasing, the conduct of such operations and their legal regulation in the Russian Federation have certain specifics. According to the legislation (Article 665 of the Civil Code of the Russian Federation), under a financial lease agreement (leasing agreement), the lessor undertakes to acquire ownership of the property indicated by the tenant from a seller specified by him and provide this property for a fee for temporary possession and use for business purposes.
Thus, under leasing in the Russian Federation, only financial leasing is legally recognized, which is characterized by the following specific features:
- the third obligatory participant - the equipment supplier;
- the presence of a complex of contractual relations;
- special purchase of equipment for leasing it;
- active role of the lessee;
- Mandatory use of the leased asset for business purposes.
Legal regulation of leasing in the Russian Federation is carried out on the basis of the Civil Code of the Russian Federation, Federal Law No. 164-FZ of October 29, 1998 "On Financial Lease (Leasing)" (with subsequent amendments and additions), as well as the Tax Code of the Russian Federation.
According to the law, any non-consumable things (enterprises, property complexes, buildings, structures, equipment, vehicles, movable and immovable property, etc.) used for business activities can be the subject of leasing.
The subject of leasing in the Russian Federation cannot be:
- land plots and other natural objects;
- property withdrawn from circulation or limited in circulation;
- results of intellectual activity.
Currently, the leasing market in the Russian Federation is developing at a very fast pace. At the same time, in terms of the share of leasing in financing enterprises, Russia is significantly inferior to developed countries, where it ranges from 15 to 30% of all capital investments.
The intensive development of leasing in our country is due to a number of factors, among which a special place is occupied by state support and provided tax incentives, the most significant of which are:
^ the possibility of using accelerated depreciation of equipment with a coefficient not higher than 3 (Article 259 of the Tax Code of the Russian Federation);
^ lease payments are included in the expenses of the lessee in full (i.e., both the “percentage” and the main part) when calculating income tax (Article 264 of the Tax Code of the Russian Federation).
Leasing allows enterprises in the real sector, under conditions of relatively less financial stress (dispersion of costs over time), to update fixed assets, form a technological base for new types of products, paying for property from funds received from operating activities.
Formally, leasing is a relatively affordable form of attracting investments for medium and small enterprises, since it does not require a complex package of guarantees and additional security, since the enterprise receives full ownership of the equipment only if it is fully repurchased.
However, it should be noted that, in contrast to the practice of developed countries, in the Russian Federation, the subject of leasing is usually not the only security for the transaction. Its share in provision usually does not exceed 60%, and in many cases it is much lower. As a rule, the main type of security is the lessee's advance (54% of the number of current transactions), which usually amounts to 25-30% of the total amount of the leasing agreement. Guarantees from legal entities (11%), a buyback guarantee from the equipment supplier (10%) and even guarantees from individuals are also important.
Among the objects of leasing in the Russian Federation, the leading positions are occupied by highly liquid types of equipment, such as passenger (8%) and freight vehicles (10%), railway transport (8%), machine-building (4%) and road-building equipment (4% ), woodworking and logging (4%), as well as printing equipment (3%). A significant share of telecommunications equipment (22%) in the transaction portfolio of leasing companies is explained by large domestic demand and its high cost.
According to experts, promising segments of the domestic market are the leasing of retail and office real estate, as well as power equipment.
Russian leasing companies can be classified according to the type of founders into the following main groups:
- created under Russian banks;
- created under foreign banks;
- members of financial and industrial groups;
- created by state structures;
- created by manufacturers (suppliers).
The largest leasing companies in the Russian Federation are RTK-Leasing, Avangard-Leasing, Alfa-Leasing, Rosagroleasing, Russian-German Leasing Company, etc.
According to experts, the most accessible today is leasing financing for a period of 1-3 years. For such a period, contracts are usually concluded for relatively inexpensive (up to 1 million US dollars) and liquid leasing objects. Leasing transactions with more expensive and less liquid objects are concluded for 3-5 years, and sometimes more (for example, the typical term of an airliner leasing agreement is 10-15 years).
In the general case, a leasing operation involves the implementation of three main stages:
1) preparation and justification;
2) conclusion and legal registration of the transaction;
3) actual performance.
At the first stage, the needs for specific assets are determined, a supplier is searched for and a leasing company is selected. When choosing a leasing company, you should pay attention to its industry specialization and relationships with suppliers. A leasing company that has established a stable relationship with a supplier has significant advantages (the possibility of obtaining a commercial loan from the supplier or its obligations to repurchase the asset or sell it on the secondary market, discounts, service, etc.), which ultimately extend to the lessee . It is obvious that leasing companies created by suppliers enjoy such advantages to the greatest extent.
As a rule, leasing companies themselves are active in collecting information about promising types of equipment, prices, suppliers, analyze demand, market conditions and many other factors. Therefore, an enterprise can apply directly to the lessor with a request to select a supplier of certain property.
After selecting and checking the business reputation of the leasing company, the enterprise sends it an application for the purchase of selected types of equipment. The application is drawn up in any form, but it must contain: the name of the property, its parameters, technical and economic characteristics, as well as the location of the potential supplier and its details.
Simultaneously with the submission of the application or after the decision is made to consider it, the potential lessee submits all the documents that the lessor will require. The standard set of documents includes notarized copies of constituent documents, financial statements for several previous periods, a feasibility study or a business plan for the relevant project. If necessary, the lessor may require the provision of additional information.
After the lessor receives all the necessary documents, a comprehensive analysis of the project begins, the main purpose of which is to assess the ability of the lessee to pay rent payments, as well as to assess the demand for the property in order to identify the possibility of its re-letting or sale in case of early termination of the contract .
Having made a positive decision to enter into a leasing transaction, the lessor, on the basis of the received application, sends an order to the supplier and begins its legal registration.
At the second stage, the legal registration of the transaction takes place: a parallel conclusion of two main documents - a document for the sale of property from a supplier and a leasing agreement. An agreement is concluded between the owner of the property and the user on providing the latter with a leasing object for temporary use for entrepreneurial activities.
A typical lease agreement usually contains the following main provisions:
- the subject of the contract;
- order of delivery and acceptance of property;
- rights and obligations of the parties;
- property use, maintenance, repairs and modifications;
- insurance;
- term of leasing;
- lease payments and penalties;
- responsibility of the parties;
- settlement of disputes;
- conditions for early termination of the contract;
- actions of the parties upon completion of the transaction;
- other conditions;
- Force Majeure;
- legal addresses and bank details of the parties.
The subject of the contract indicates the property that will be purchased and transferred to the user for temporary use, its cost, place and delivery time. As a rule, transportation costs for the delivery of property are allocated as a separate amount, as they are paid by the lessee.
An obligatory condition of the leasing agreement is an indication of its validity period, and the date of commencement of the calculation of the term of the agreement is the date of acceptance of the property by the lessee.
In the order of delivery and acceptance of leasing property, it is reflected which parties are involved in the acceptance of equipment. How
as a rule, these are the supplier, the lessor and the lessee. In some cases, the lessor may transfer its rights to accept the equipment to the lessee. If necessary, an acceptance test schedule is drawn up. The terms of acceptance of the property must be given.
Acceptance of property is formalized by an act of acceptance, which is signed by all parties involved. From the date of signing the acceptance certificate, the formal countdown of the term of the leasing agreement begins, and all rights to use the property are transferred to the lessee.
After signing the acceptance certificate, the lessor begins to perform its main function - pays the supplier's bills under the sales contract. The order of payment is determined in the contract of sale. As a rule, the lessor, at the time of signing the sale and purchase agreement, makes an advance payment to the supplier in the amount of 20-30% of the property value, and pays the rest of the cost after signing the acceptance certificate.
With the signing of the act of acceptance of property, the third stage of the leasing transaction begins - its implementation. At this stage, the exploitation of the delivered property by the lessee and the payment of lease payments is carried out.
After the expiration of the leasing period, agreements are drawn up for further use, acquisition of equipment into ownership or its return to the owner.
In conclusion, we briefly characterize the most important advantages and disadvantages of leasing as a source of financing, arising from its specifics in the Russian Federation.
The main advantages of leasing are:
- provides financing of the investment operation in full and does not require immediate payments, which allows the use of expensive assets without diverting significant amounts of funds from business activities;
- formally, it is easier for an enterprise to obtain assets through leasing than a loan for its acquisition, since the subject of leasing, with sufficient liquidity, can simultaneously act as collateral;
- a more flexible source than a loan, as it provides an opportunity for both parties to develop a convenient payment scheme (for example, lease payments can be made after receiving proceeds from the sale of goods produced on leased equipment);
- allows various forms and types of security;
- reduces the risks associated with the ownership of assets;
- in the Russian Federation, lease payments are charged to production costs (cost) of the lessee in full and, accordingly, reduce taxable income;
- the received assets, as a rule, are not registered with the lessee on the balance sheet, which exempts him from paying tax on this property;
- provides the possibility of obtaining qualified service and maintenance, etc.
The specific disadvantages of leasing include the following:
- for the lessee, the final cost of leasing is usually higher than buying equipment on credit;
- the need to make an advance payment in the amount of 25-30% of the transaction value;
- payments are mandatory and are made on time, regardless of the condition of the equipment and the results of economic activity;
- benefits from the accelerated depreciation of the equipment get to the lessor;
- leasing increases the financial risks of the enterprise;
- in domestic conditions, additional guarantees or collateral are required;
- legal complexity of the transaction, etc.
Among the problems of the development of the leasing form of financing in the Russian Federation at the present stage, we should highlight the acute shortage of resources, low capitalization and tax risks of leasing companies. At the same time, the rapid growth of the domestic leasing market attracts the attention of the largest foreign companies. So, at the end of 2005, several well-known leasing companies, such as CHG Meridian Deutsche Computer Leasing AG, VB-Leasing International Holding Gmbh, and others, announced the start of work in the Russian Federation at once. Increased competition will inevitably lead to consolidation domestic companies, an increase in the number of mergers and acquisitions
in this sector, which will facilitate the development of new segments, increase the volume of transactions, and further enhance the role of leasing in financing enterprises.

»
Newspaper “Account. Taxes. Law”, January 2006

The cost of loans according to international standards

If the interest rate on the issued loan is below the market rate, and on the loan received - above the market rate, then IFRS require that the borrowed funds be measured at fair value. The difference between this cost and the loan amount itself will be a payment for a loan that is unfavorable for the company. It is usually expensed separately and affects the carrying amount of borrowings. As a result, IFRS reporting data reliably show the result of the transaction.

The organization issues or takes a loan on unfavorable terms for itself. As a rule, such contracts include payment for benefits in other operations. For example, the company is counting on the opportunity to influence the economic decisions of the counterparty, the possibility of concluding a more profitable contract. The fee for such opportunities in Russian accounting is not allocated anywhere. If you follow the principles of international standards, then such a fee in the form of imputed interest is taken into account in the reporting, making it more reliable.

Reference

In International Financial Reporting Standards, accounting for borrowing costs is regulated by IAS 23 "Borrowing Costs", accounting for received and issued loans - IAS 32 "Financial Instruments - Disclosure and Presentation of Information", IAS 39 "Financial Instruments - Recognition and Measurement" and Guidelines for Application IAS 39.

Imputed Interest - Expenses

Imputed interest expenses in IFRS arise as the difference between the actual amount of the loan and its initial assessment (the initial cost of the financial instrument). And the initial assessment will be different from the amount of the loan when the organization takes it at a rate above the market or issues a loan at a rate below the market. Let's explain why.

As a general rule (IAS 39.43), financial instruments (assets and liabilities) are recognized at initial recognition at their fair value. The fair value of cash is equal to their face value, therefore, in general, the initial cost of received or issued cash loans will be equal to the body of the received (issued) loan. That is, in fact, as in Russian accounting.

When a company issues loans at a rate below the market (or receives loans at a rate above the market), it is obvious that the formal approach to the transaction does not reflect the essence of the transaction. A loan here is not only a loan, but also a fee for other unreported transactions. As we have already noted, this may be a fee for the opportunity to influence the economic decisions of the counterparty, a fee for the opportunity to conclude a more profitable contract, etc. Or the company does not receive any benefits from such an operation and enters into a disadvantageous transaction at a loss to itself (but, for example, in favor of a shareholder or a group of companies as a whole). However, the accounting procedure remains the same.

So, with such unprofitable transactions, the loan is divided into two parts in accounting:

• for a direct loan
• and imputed interest. They are recognized as an expense at a time (they can also be attributed to an increase in the value of an asset, if this possibility is provided for by the relevant standard, and these expenses can also be reflected as a decrease in income).

Let's proceed directly to the calculation of the initial cost of the loan. It is measured by discounting future cash flows (receipts or payments) through the life of the financial instrument using a market rate.

Reference

There are a lot of explanations in IAS 39 on determining the market rate, which, however, do not make the job easier. In practice, we usually value the market rate on loans based on the Libor rate in the same currency with the same term (with adjustments if the loan term is more than a year) plus the country premium, plus the rate of return, plus adjustments for security, size and length of the loan. For loans within Russia, the refinancing rate of the Central Bank plus additional named adjustments is often used as the base rate in calculations.

To calculate the initial cost, we work with the usual discount formula.

PV = FV/(1+i)n, where

FV - future value,

PV - initial cost,

i is the discount rate (in this case, the market rate),

n – term (number of periods).

We apply this formula on numerical data.

Example.

In the reporting period (year), the company had the following loan transactions:

Loan No. 1 received

On February 1, an agreement was signed with the lender to provide a loan in the amount of 3,000,000 euros (funds are provided within the credit line at the request of the borrower).

The rate is 10 percent. Interest is calculated on the basis of a year of 365 days. Interest is paid in a lump sum upon repayment of the principal amount.

The term of the loan is 1 year from the date of the first tranche.

The loan is unprofitable for the company (the market rate is defined as 6.4382%))

Loan No. 2 received

On March 1, an agreement was signed with the lender for a loan in the amount of 600,000 euros (funds are provided within the credit line at the request of the borrower).

The rate is 1.5 percent. Interest is calculated on the basis of a year of 365 days. Interest is paid in a lump sum upon repayment of the principal amount.

The loan is profitable for the company (the market rate is defined as 6.02%)

Issued loan No. 3

On March 1, an agreement was concluded with the borrower for a loan in the amount of 1,500,000 euros (funds are provided within the credit line at the request of the borrower).

The rate is 15 percent. Interest is calculated on the basis of a year of 365 days. Interest is paid in a lump sum upon repayment of the principal amount.

The loan term is 3 years from the date of the first tranche.

The loan is profitable for the company (the market rate is defined as 7.82%)

Issued loan No. 4

On April 1, an agreement was signed with the lender for a loan in the amount of 1,000,000 euros (funds are provided within the credit line at the request of the borrower).

The rate is 3 percent. Interest is calculated on the basis of a year of 365 days. Interest is paid in a lump sum upon repayment of the principal amount.

The loan term is 2 years from the date of the first tranche.

The loan is not profitable for the company (the market rate is defined as 7.2810%)

Calculate the initial cost of loans:

The initial cost at a market rate of 6.4382% would be EUR 1,033,464:

(€1,000,000 + €1,000,000 X 10% X 1 year X 365 days / 365 days) / (1+0.064382)1

The initial cost of the loan will be EUR 500,000, as it was received at a below market rate (6.02%), which does not require accounting adjustments.

The initial cost is equal to the funds provided (800,000 euros), since the loan was issued at a rate higher than the market rate (7.82%).

It was issued at a rate of 3%, while the market rate was 7.2810%. Therefore, its initial cost would be EUR 644,701: (EUR 700,000 + EUR 700,000 X 3% X 2 years X 365 days/365 days) / (1+0.07281)2

The difference between the initial cost and the amount of borrowed funds on the received loan No. 1 (33,464 euros) and the issued loan No. 4 (55,299 euros) will be imputed interest. These are expenses of the organization that are recognized as a lump sum on the date of receipt (issue) of the loan.

Reference

The requirement to record contingent interest is based on the same assumptions as the accounting for onerous contracts under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Its principle is that a current obligation under a contract, the fulfillment of which requires unavoidable costs that exceed the economic benefits that are expected to be received from it, is not recognized as the contract is fulfilled (as usual), but immediately on the date the contract is entered into.

To ensure that the final financial result remains the same as in the absence of conditional interest, the amounts of conditional interest are amortized using the effective interest rate method (more on this method in the next section of the article) during the life of the loan agreement. By the time the loan is repaid, a similar amount of imputed interest is recognized as imputed interest gains.

In our example, the expiration of bad loans for the current period does not occur. Therefore, only a partial amount of accrued conditional interest that relates to the reporting period is recognized in income. We will calculate it after determining the amounts of real interest that must be accrued in the reporting period.

Calculation of real interest - its own peculiarity

The initial cost of the loan, and, consequently, the imputed interest, is determined on the date of receipt (issue) of the loan. The financial statements also show the amortized cost of loans. It is considered as follows:

Amortized cost of the loan = = Initial cost of the loan + (for loans issued, for loans received here is a “-”) + imputed interest + + Interest accrued using the effective interest method

In addition, amortized cost includes the amortized cost of new credit tranches and actual cash inflows (outflows) (for principal and interest repayments). In our example, this data is not available, so to determine the amortized cost of loans, it remains to calculate interest using the effective interest method (IAS 39.9). Its use assumes that interest is simply distributed differently over the life of the loan. But the final amount of the real payment for the use of borrowed funds, of course, will be the same both in accounting according to Russian standards and according to IFRS.

Interest using the effective interest method is calculated from the amortized (accumulated) cost of the loan at the beginning of the period at the contractual effective interest rate. In the first reporting period for a loan, its initial estimate is used as the amortized cost. The cost of the loan is called amortized, because at the end of each period, the interest accumulated for this period is added to it (and the rate remains unchanged). Thus, in each subsequent period, the amount of accumulated interest will be slightly larger.

In order not to calculate interest every month, we use the compound interest method and calculate the amount of interest for the period from the day following the day when loans were taken (issued) until the end of the year. First, find the effective interest rate. Consider its calculation on the example of loan No. 1.

To calculate the effective rate, the discounting formula is used (we have already used it when calculating the initial cost of the loan):

FV \u003d PV X (1 + i) n,

From it we obtain a formula for calculating the effective interest rate:

i = (FV/PV)1/n – 1

FV (Future Value) = Loan body + interest accrued up to the maturity date = EUR 1,000,000 + EUR 1,000,000 X 10% X 1 year X 365 days/365 days = 1,100,000 euros

PV (current value) = €1,000,000

n = 1 year = 12 months

Effective interest rate = (€1,100,000 / €1,000,000)1/12 – 1 = 0.007974 x 100 = 0.7974%

Similarly, for Loan No. 2, the monthly effective interest rate will be 0.1223%, for Loan No. 3 - 1.0375%, for Loan No. 4 - 0.2431%.

Next, we calculate the number of months for which interest should be calculated in the first period. From the day following the day of receipt of loan No. 1 and issuance of loan No. 4 (for both - May 1) until the end of the year, 244 days. The average length of a month is 30.4 days. Accordingly, the number of months is 8,026. For Loan #2 and Loan #3, the number of months would be 7,007 (date received and date issued June 1st).

So, we consider the interest on loans that need to be accrued in the reporting period:

1,000,000 X (1 - (1+ 0.007974)8.026) = 65,821 (payable)

500,000 X (1 - (1+ 0.001223)7.007) = 4301 (payable)

800,000 X (1 - (1+ 0.010375)7.007) = 60,002 (to be received)

700,000 X (1 - (1+ 0.002431) 8.026) = 13,775 (to be received)

In the first period, the amount of accrued interest under IFRS will be slightly less than under RAS (for example, 70,027 would be accrued on loan No. 3 under RAS, and 60,002 under IFRS). But the use of the effective rate in the calculations, of course, does not change the financial result. Interest accrued over the entire period of the loan, both in IFRS and RAS, will amount to EUR 360,000 for the third loan. As we have already said, the application of the effective rate only changes the distribution of accrued interest over periods.

Imputed interest - income

So that imputed interest in expenses does not distort the final financial result (as if imputed interest were not accrued at all - as in Russian accounting), we calculate the imputed interest that must be reflected in income in the reporting period. For this, the monthly effective interest rate for conditional interest is found. We calculate it according to the formula:

i = (FV/PV)1/n – 1

(1,033,464 euros / 1,000,000 euros) 1/12 - 1 X 100 = 0.2747%

(700,000 euros / 644,701 euros) 1/24 - 1 X 100 = 0.3435%

Further, the number of months for which conditional interest should be calculated in the first period is calculated. We have already determined it when calculating the actually accrued interest - 8.026 months. The compound interest method calculates the amount that should be recognized for the entire period as notional interest income:

EUR 1,000,000 X (1 - (1+ 0.002747)8.026) = EUR 22,261

€644,701 X (1 - (1+ 0.003435)8.026) = €17,990

Next year Loan No. 1 will recognize contingent income of €11,203 and Loan No. 4 €27,838, and so on until the amount of the initially recognized loss is paid off (which will occur during the loan repayment period).

Final data

Data for the year are summarized in tables 1a and 2a. A comparative analysis of these data and the results of calculations according to Russian rules can be found in the material “Analysis of Reporting Data”.

Table 1a

Borrowing income and expenses calculated in accordance with IFRS

Table 2a

Balance sheet figures calculated according to IFRS

Interest in national accounting

In Russian accounting, the value of the market rate for an issued or received loan is not necessary for its initial assessment. The amount of the loan is determined as actually received funds. And interest on it is accrued evenly over the term of the loan. Using the example of numerical data that we used to calculate the book value of loans under IFRS, we will calculate the data for the Russian balance sheet.

The balance sheet, compiled in accordance with the rules of Russian accounting standards, reflects the amount of the loan and interest payable and receivable. No imputed interest will be considered.

Borrowed funds, regardless of whether the organization takes or provides a loan, are accepted for accounting in the amount of actually received or paid funds (clause 3 PBU 15/01 “Accounting for loans and credits and the costs of their maintenance”, clause 9 PBU 19/02 "Accounting for financial investments").

Interest income and expenses are accrued in Russian accounting based on the terms of the agreement (clause 6.1 PBU 9/99 "Income of the organization", clause 6.1 PBU 10/99 "Expenses of the organization").

The calculation is made as follows:

Loan body X

X Interest rate under the contract X

Х Time to reporting date /

/ Duration of the year under the contract

We use the numerical data from the material "The cost of loans according to international standards" and calculate the interest payable and.

EUR 1,000,000 X 10% X 244 days /365 days = 66,849 euros (payable)

EUR 500,000 x 1.5% x 213 days/365 days = 4377 euros (payable)

EUR 800,000 X 15% X 213 days / 365 days = 70,027 euros (receivable)

EUR 700,000 X 3% X 244 days / 365 days = EUR 14,038 (receivable)

The final data for the year are summarized in tables 1b and 2b (see below). For a comparative analysis of these data with calculations according to international standards, see the article "Analysis of reporting data". Table 1b Income and expenses on loans calculated according to Russian standards No. Type of income (expense) Amount Note 1 Interest receivable (income) 84,065 Interest calculated based on the terms of the agreement 2 Interest payable (expenses) (71,226) 5 Total financial result 12,839 Table 2b Balance sheet calculated according to Russian standards No. Type of asset (liabilities) Value Note 1 Asset / Loans issued 1,584,065 800,000 + 700,000 + 84,065 2 Liabilities / Loans received 1,571,226 1,000,000 + 500,000 + 71 226

Analysis of reporting data

A different calculation of interest accrued on loans in IFRS and in Russian standards leads to completely different results. Moreover, in relation to IFRS reporting data, there may be a risk of manipulation with numbers.

Let's compare the reflection of the same transactions in Russian financial statements and reports prepared according to international standards. The calculated results for reporting under IFRS are presented in tables 1a and 2a (the article "The cost of loans according to international standards"). The data obtained for Russian reporting are summarized in similar tables 2a and 2b (article "Interest in national accounting").

So, according to IFRS, assets are less than assets under Russian standards by 47,597 euros, and liabilities are more by 10,099 euros, which reflects the presence of transactions made on terms less favorable than market ones.

In addition, in IFRS, a negative financial result is obtained: - 44,857 euros. While by Russian standards, the final financial result was positive, namely 12,839 euros. That is, according to IFRS, the financial result deteriorated by more than 57,000 euros. The reasons for such a huge difference are the different procedure for calculating interest under the contract and the need to take into account conditional interest under IFRS.

Various interest rates

In calculating interest according to IFRS rules, we proceeded from the fact that not the contractual nominal interest rate is applied, but the effective one. In our example, as a result of applying the effective interest rate on all loans, the final financial result decreased by 9184 euros. At the same time, in the future periods of the same example, the amount of interest at the effective rate will exceed the amount of interest at the nominal rate, so that in the end the financial result would be identical. Due to the peculiarities of the calculation, the longer the term of the loan agreement, the greater the impact on the amount of interest for each period will be the fact that the effective interest rate is applied.

Imputed interest – risk of manipulation

But the main reason for discrepancies in calculations under IFRS rules and Russian standards is still the need to reflect imputed interest when accounting for loans issued at a rate below the market rate and loans received at a rate exceeding the market one. What is the economic meaning of all those complex accounting procedures that we have done in the calculations?

Firstly, in increasing the comparability of reporting (both different companies and one company for different periods).

Secondly, assets and liabilities under this procedure are recorded at a cost that reflects the real financial position of the company.

And, thirdly, this procedure corresponds to the principle of caution (prudence) laid down in the IFRS Concept (a similar principle is declared in Russian standards, but even in the legislation it is not fully applied).

So, the procedure for accounting for loans issued and received in IFRS is based on market interest rates. And accounting results can be very sensitive to the assessment of market rates, and reporting, accordingly, can be distorted. For example, if we increase by 1 point the estimate of market rates for loans issued and lower by 1 point (1 percent) the estimate of market rates for loans received, then in our example the amount of imputed interest in expenses will increase to 110,417 euros, and in income - to 50,443 euros. Accordingly, the final financial result will be - 56,319 euros, i.e. the loss increased by 11,462 euros or a quarter.

At the same time, the organization itself evaluates the value of market rates. Of course, this cannot but provide opportunities for the manipulation of reporting data. How can this risk be reduced? The risk can be mitigated by the proper functioning of the internal control system in the organization and if independent auditors are used to express an opinion on the reporting. In fact, it is a conscious, controlled risk. Without it, the reporting would not accurately reflect the financial position and financial results of the organization. Otherwise, accounting would be reduced to a simple reflection of the legal aspects of the concluded contracts (in form, not in content).

Therefore, the IASB consistently emphasizes (in particular in IAS 8.33) that the use of reasonable estimates is an important part of the preparation of financial statements and does not reduce the degree of their reliability. So far, it is this approach, and not individual differences in accounting for reporting elements, that conceptually distinguishes accounting according to Russian standards and accounting according to IFRS. In Russian standards, the possibilities for the application of professional judgment are reduced to a minimum: the standards regulate almost all the actions of an accountant. That is why a fundamentally larger application of professional judgment is still in practice one of the most serious psychological difficulties for Russian compilers and users of reporting in working with international standards.

A. N. Kalanov, Head of International Reporting Department

The basis of any business is equity capital, however, at enterprises in a number of industries, the amount of borrowed funds used significantly exceeds the amount of equity capital. The use of borrowed capital allows not only to significantly expand the scope of the company's business activities and ensure a more efficient use of equity capital, but also to accelerate the implementation of large investment projects, and ultimately increase the market value of the organization.

In economic terms, any loan is an unconditional obligation of the subject to return the amount received in debt by a certain date and pay its owner a predetermined remuneration in the form of interest for the use of funds.

Sources and forms of debt financing are quite diverse. Debt financing is based on the following fundamental principles that determine its essence:

returnability;

payment;

urgency.

The principle of repayment reflects the need for the borrower to fully reimburse the amount received (the principal amount of the debt) on time. In real practice, the fulfillment of this requirement by the borrower depends on the stability of the financial results of its activities (sales proceeds, profit, etc.), as well as on the quality of the loan security.

The principle of payment expresses the obligatory payment by the borrower of interest for the right to use the resources provided by the creditor for a certain time. Interest rates on loans include the market value of money depending on the terms and volumes, as well as premiums for risk, liquidity, etc. required by lenders.

The principle of urgency characterizes the period of time for which borrowed funds are provided and after which they must be returned to the lender. In the process of calculations, the full and average period of use of borrowed funds are determined.

The full term of use of borrowed funds is the period of time from the beginning of their receipt to the final repayment of the entire amount of the debt. It includes three time periods:

a) the useful life is the period of time during which the enterprise directly uses the provided borrowed funds in its investment activities;

b) grace (grace) period - this is the period of time from the end of the useful use of borrowed funds to the beginning of debt repayment. It serves as a reserve of time for the accumulation of the necessary financial resources;

c) maturity - this is the period of time during which there is a full payment of principal and interest on the borrowed funds used. This indicator is used in those cases where the payment of principal and interest is not carried out immediately after the expiration of the period of use of borrowed funds, but in installments over a certain period of time according to the prescribed schedule.

The average period of use of borrowed funds (tav) is the average settlement period during which they are in use at the enterprise. It is determined by the formula:

tpi, tlp, tp - useful life, grace period, repayment period, respectively.

In general, debt financing, regardless of the form of attraction, has the following advantages:

ü fixed cost and term, providing certainty when planning cash flows;

ü the size of the payment for use does not depend on the income of the company, which allows you to keep excess income in case of their growth at the disposal of the owners;

ü the ability to raise the return on equity through the use of financial leverage;

ü the use fee is deducted from the tax base, which reduces the cost of the attracted source and the capital of the company as a whole;

ü Intervention and obtaining rights to manage, etc. are not expected.

Common disadvantages of debt financing include:

ü obligatoriness of the promised payments and repayment of the principal amount of the debt, regardless of the results of economic activity;

ü increase in financial risk;

ü the presence of restrictive conditions that may affect the economic policy of the company (for example, restrictions on the payment of dividends, attraction of other loans, mergers and acquisitions, pledge of assets, etc.);

ü possible security requirements;

ü restrictions on terms of use and volumes of attraction.

In addition to the general ones, each specific form of debt financing may have its own advantages and disadvantages arising from its specifics.

Borrowed capital used by the enterprise characterizes in aggregate the volume of its financial liabilities, which are differentiated into long-term and short-term financial liabilities.

Long-term include all types of borrowed capital functioning at the enterprise with a period of its use of more than one year. The main forms of these obligations are:

long-term bank loans;

long-term borrowings, including debt on a tax credit;

· debt on issued corporate bonds;

arrears of financial assistance provided on a repayable basis;

· other forms of long-term financing, including leasing operations.

The maximum amount of attraction of long-term borrowed funds is dictated by two main conditions:

a) the marginal effect of financial leverage. Taking into account the amount of equity in the coming period and the calculated level of financial leverage, the maximum amount of borrowed funds is calculated to ensure the efficient use of equity;

b) ensuring sufficient financial stability of the enterprise, which is assessed from the standpoint of the enterprise itself, but also from the standpoint of its creditors, in order to reduce the cost of raising borrowed funds.

Short-term types include types of borrowed capital with a period of use of less than one year. The main forms of these obligations are short-term bank loans, as well as the use of factoring operations.

An integral part of the management of borrowed funds is to determine the objectives of their attraction in the coming period. These funds are attracted by the enterprise on a strictly targeted basis, which is one of the conditions for their subsequent effective use.

The effective use of loans of various types allows companies to expand the scale of operations, increase the return on equity, and ultimately maximize the value of the company.

There are two explanations for the formation of the market interest rate:

1. as a result of the interaction of supply and demand in the credit market and 2) through the bond market.

Market interest rate and credit market. To clarify the mechanism of the credit market, a comparison of the time preferences of lenders and borrowers is of particular importance. Lenders, drawing up their spending and savings plans, proceed from the fact that they maximize the result not only at a given moment in time, but also over a certain time horizon. Their decisions are directly dependent on changes in interest rates in the credit market. An increase in interest rates will mean that the return on savings increases. At very high levels of interest rates, even those who are focused on current consumption will find it worthwhile to save in the form of financial instruments. At a high interest rate, firms will also find that the productivity of capital is relatively low and it is more profitable for them to become creditors. The supply of credit will increase. If interest rates fall, the situation will be reversed, the supply of credit will decrease.
On the other hand, the demand for credit is inversely related to interest rates. With lower interest rates, a large part of the population will opt for increasing current consumption through borrowing. From the point of view of firms, a greater number of investment projects will appear, for the implementation of which it makes sense to attract borrowed capital. If we also take into account the fact that the state is a large borrower and it is more profitable for it to make loans at low interest rates, then it can be argued that the demand for credit will increase with a decrease in interest rates and, conversely, decrease with an increase in them.
Thus, the market rate of interest will be established as a result of the interaction of supply and demand in the credit market. With an excess supply of credit, lenders will be forced to lower the interest rate and, accordingly, reduce the volume of supply. With a shortage of borrowed funds, competition between borrowers will raise the rate and reduce demand. The process will continue until the market reaches an equilibrium where neither lenders nor borrowers have incentives to change their behaviour.
The market rate of interest and the bond market. The bond market model has the usual form if we consider the dependence of supply and demand on the price of bonds. The higher the price of bonds at a given moment in time, the fewer bonds buyers are willing to purchase. Conversely, sellers are willing to offer more bonds if their price rises. It is known that the price of bonds changes in inverse relation to the change in the interest rate. Therefore, the volume of demand for bonds is in a straight line, and their supply is inversely related to the interest rate (the demand curve has a positive slope, the supply curve has a negative slope). In fact, there is no contradiction here, since the supply of bonds shows how much is demanded for loans. Similarly, the demand curve for bonds can be viewed as the supply of loans (Fig. 15.1).

Rice. 15.1. Graphical representation of equilibrium in the credit market
The two ways of explaining interest rates (the credit market and the bond market) are essentially equivalent. Their use depends on the objectives of the study and the convenience of presentation, for example, issues of conducting monetary policy.
The interest rate as the price of a loan performs an important function of distributing money and, accordingly, real capital between economic agents - individuals, firms. The funds are directed to such investments, the profitability or rate of return of which is relatively high compared to the interest rate. For example, if the firm assumes that the rate of return on expansion of production capacity will be 12%, and the necessary borrowed funds can be attracted at a rate of 10%, then the firm can resort to a loan and carry out this investment project. If the expected rate of return is only 8%, then it will be unprofitable for the firm to expand production. In this case, she will not be able to cover the costs of attracting a loan. Thus, profitable firms have the opportunity to expand, while insufficiently profitable and inefficient firms are forced to curtail their activities.
The interest rate distributes consumption over time. The opportunity to receive a loan is provided to those consumers whose incomes and current consumption preferences are higher.
Market interest rates for any type of asset change. In other words, the general level of interest rates can rise and fall. These changes are due to a large number of factors affecting the demand and supply of credit. To the most important of them,
WEAR the level of INCOME and the state of business activity, the price level and inflation rates, government policy and the money supply, the state of the balance of payments, as well as factors directly related to op. organization and structure of financial markets.
In terms of credit and bond market models, fluctuations in interest rates are explained by shifts in supply and demand curves. Curve shifts mean that the amount of demand (or supply) becomes different for each given value of the interest rate in response to changes in any of the above factors. As a result of shifts, a new equilibrium value of the interest rate and volumes of lending to the economy is established.
The main factors of demand for loans include: a) the expected rate of return; b) expected inflation; c) public debt. Credit supply factors are determined by: a) the level of wealth and income; b) the expected return on assets; c) risks; d) liquidity. Let's see how they work.
Expected rate of return. Firms' expenditures on the purchase of new capital goods and the maintenance of inventories depend on the profitability of investment projects. If firms expect profits to increase in the future, then the amount of planned investment will increase and the demand for credit will increase. Conversely, expectations of a decline in the rate of return will mean a decrease in the volume of planned investment, and the demand for credit will decrease. It should be noted that the direct nature of the dependence of the rate of profit and the demand for credit does not mean the direct nature of the relationship. Investments can be made from internal sources or fundraising. Therefore, considering the impact of this factor, it is necessary to make the traditional assumption for economists about "other things being equal".
Expected inflation. Rising inflationary expectations of borrowers while nominal interest rates remain unchanged means that real interest rates are declining. Consequently, the profitability of borrowing increases. The demand for credit is growing.
The volume of government borrowings. To cover the state budget deficit, the government borrows and places government bonds. The regions also borrow to cover their expenses. At the same time, the volume of government borrowing can be so large for any value of interest rates (as it was in the Russian Federation before the August 1998 crisis) that it becomes the most important determinant of the credit market.
Welfare level. The growth of wealth, income level and, accordingly, savings in the economy leads to an increase in the supply of credit. The population is increasing the amount of savings provided to banks, banks are more actively lending to the economy, and the volume of bond purchases is increasing. During an economic downturn, falling incomes lead to a reduction in the supply of credit.
Expected return on assets. When making a decision to grant a loan or purchase debt securities, the assumptions of creditors regarding changes in their returns in the future are important. If lenders expect interest rates to rise in the future and therefore lower the yield on bonds purchased in the current period, then the supply of credit will decrease at any of the possible interest rates. Lenders' decisions will also be influenced by expectations of changes in the returns of stocks and real assets - cars, real estate, etc. If forecasts of the future state of the stock markets predict an increase in stock prices and, accordingly, an increase in returns, the supply of credit will decrease. Expectations of rising prices for real assets will lead to the same result. An increase in prices, for example for real estate, will give higher capital gains, and hence higher returns. At a given interest rate, lending will be relatively less profitable than buying real estate, and the supply of credit will decrease. Thus, the supply of credit is directly related to the expected rate of inflation.
Risk. If lenders are unsure of the future rate of inflation and therefore do not know where interest rates will settle, they are more likely to demand higher interest rates to cover the risk of lending, especially in the long run. Lenders' attitudes to the risk that real returns will be lower than expected will also affect the supply of credit and the overall level of interest rates.
Liquidity. The loan supply may increase due to an increase in the degree of liquidity of debt financial instruments - bills of exchange, corporate bonds, government bonds, etc. equal conditions to change the loan offer.
Now let's look at how changes in supply and demand will affect market interest rates (Figure 15.2). Assume that borrowers expect an increase in inflation and a decrease in real borrowing costs. At a given interest rate, i.e., the demand for credit can outstrip supply. The demand curve for credit shifts to the right, from position DD to position D D \\ Excess demand will put upward pressure on the interest rate.
On the other hand, lenders' assumptions that inflation will increase and, consequently, their asset returns will decrease in the future will lead to a decrease in the supply of credit at a given interest rate, which will increase excess demand. The supply curve shifts to the left, to the position S\"S\\Some borrowers in this situation are deprived of the opportunity to receive a loan. The other part is forced to take a loan at a higher interest rate than the current interest rate. Investment projects that do not provide a sufficiently high rate of return will not be Consumers will have to make a choice between reducing their use of credit cards or paying higher interest rates Lenders raise interest rates on loans As a result, the market will enter a new higher level of interest rates it While the equilibrium amount of credit in the economy may not change from the previous state of the market.The change in the volume of lending depends on how much
the expectations of lenders and borrowers regarding future inflation rates coincide.

Rice. 15.2. Shifts in supply and demand and the market rate of interest
The theory of the credit market explains well the impact of inflationary expectations on the level of interest rates. However, it does not give an unambiguous answer to the question of what will happen to interest rates when economic activity recovers, when the level of prosperity of the population rises and firms expect an increase in the rate of profit. In such a situation, the demand and supply of credit expand. However, depending on what expands more - supply or demand, both an increase and a decrease in interest rates are possible.
The possible change in the level of the interest rate becomes more obvious when analyzed using the theory of liquidity preference. Within its framework, the change in the level of nominal interest rates is explained by the action of three factors: 1) income; 2) the price level; 3) offers of money.
According to the theory of liquidity preference, the demand for money is inversely related to interest rates. The demand for money should be understood as the demand for real money balances adjusted for the price level. For a given value of interest rates, demand will change if the national income changes, the technique of making payments is improved, the ratio of monetary and non-monetary payments in the economy. Assuming that the banking system is stable and provides firms and the public with modern technological capabilities, such as electronic payments and ATMs, the most important factor influencing demand will be changes in income levels. As economic activity and incomes increase, the demand for real money balances increases as economic participants need more money to carry out more and more transactions.
On the other hand, interest rates do not affect the money supply. The volume of supply depends on two factors: 1) the monetary policy of the central bank and 2) changes in the price level. The central bank can increase or decrease the nominal money supply regardless of changes in interest rates. The price level will also affect the money supply. If prices rise, then the supply of real money balances will decrease.
Consider how changes in the supply and demand of money will affect the level of interest rates. An increase in income will lead to an increase in the demand for money. At a given level of interest rates and the supply of money, the demand for money exceeds the supply. Economic agents begin to adjust their financial portfolios by selling bonds. Bond prices fall and interest rates rise to a new equilibrium level. If the central bank increases the money supply, then at a given level of interest rates, the demand for money will be less than the supply. Portfolio adjustments will increase the demand for bonds and other non-monetary financial assets, their prices rise, and interest rates fall. A change in the equilibrium interest rate due to a change in the nominal money supply at constant prices is called the liquidity effect. An increase in the general price level will reduce the money supply in real terms. The demand for money is higher than the supply, and the same adjustment mechanism works to raise interest rates. A change in interest rates due to a change in the price level is called the effect of real money balances.
The models we have considered provide tools for forecasting interest rates. Nevertheless, projections of future changes in interest rates are very difficult. First, it is difficult to measure, especially such a factor as inflation expectations. Secondly, all factors act simultaneously and in different directions. Thirdly, there is no absolute independence of some factors from others, as a result of which various effects are possible. Thus, an increase in the money supply can cause an increase in the general price level. Interest rates will rise instead of falling. The effect of real cash balances will “override” the effect of liquidity. The formation of inflationary expectations as a result of an increase in the money supply will also contribute to an increase in interest rates.
The term or duration of the loan. Usually long-term loans bring a higher interest income than short-term ones.

More on Determining the Market Interest Rate:

1. 11.2. PROBLEMS ASSOCIATED WITH THE CONCEPTS OF RISK AND CERTAINTY
2. Investments and reinvestments. Formation of the market interest rate
3. Topic 2.3. Loan interest and its use in a market economy
4. Loan, deposit, discount interest, factors determining them
5. 2.3. Determining the market value of real estate by comparing sales 2.3.1. Principles applied in the method

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Sources and forms of debt financing are quite diverse.

Debt financing is based on the following fundamental principles that determine its essence:

• - recurrence;
• - payment;
• -urgency.

The principle of repayment reflects the need for the borrower to fully reimburse the amount received (the principal amount of the debt) on time. In real practice, the fulfillment of this requirement by the borrower depends on the stability of the financial results of its activities (sales proceeds, profit, etc.), as well as on the quality of the loan security.

The principle of payment expresses the obligatory payment by the borrower of interest for the right to use the resources provided by the creditor for a certain time. Interest rates on loans include the market value of money depending on the terms and volumes, as well as premiums for risk, liquidity, etc. required by lenders.

The principle of urgency characterizes the period of time for which borrowed funds are provided and after which they must be returned to the lender.

In addition to these principles, some forms of loans provide for the need to ensure the return of the funds provided and the corresponding interest payments.

In general, debt financing, regardless of the form of attraction, has the following advantages:

• - fixed cost and term, providing certainty when planning cash flows;
• - the size of the fee for use does not depend on the income of the company, which allows you to keep excess income in case of their growth at the disposal of the owners;
• - the ability to raise the return on equity through the use of financial leverage;
• - payment for use is deducted from the tax base, which reduces the cost of the attracted source and the capital of the company as a whole;
• - no interference and obtaining rights to manage, etc.

Common disadvantages of debt financing include:

• - obligatoriness of the promised payments and repayment of the principal amount of the debt, regardless of the results of economic activity;
• -increase in financial risk;
• - the presence of restrictive conditions that may affect the economic policy of the company (for example, restrictions on the payment of dividends, attraction of other loans, mergers and acquisitions, pledge of assets, etc.);
• -possible security requirements;
• - restrictions on terms of use and volumes of attraction.

The main forms of debt financing are:

• - bank loan (bank loan),
• - issue of bonds (bond),
• -leasing.

Credit (from Latin credo - “I believe”) is the classic and most well-known form of debt financing for enterprises.

The subject of lending is a legal or natural person who claims to receive financial resources on the terms of a loan and meets the requirements set by lenders (usually commercial banks) to borrowers.

The object of lending is the purpose for which the borrower needs funds.

When obtaining a loan, enterprises usually pursue the following goals:

• - financing of working capital (current activity);
• - financing of investment projects (capital investments);
• - refinancing of previously attracted loans;
• - financing of mergers and acquisitions, etc.

Loans for replenishment of working capital are short-term (up to 1 year). As a rule, it takes a little time to receive them (up to two weeks). In most cases, when providing them, banks do not require collateral in the form of fixed assets. Such security is the future revenue of the enterprise or purchased inventory (subject to their liquidity). However, it is difficult for banks to control the safety of stocks in the amount necessary to secure a loan, and for various reasons, enterprises may need to reduce them and put them into circulation. Therefore, such a loan is easier to obtain for enterprises with a good business reputation and stable financial

state. Programs for loan financing of working capital exist in almost every Russian bank.

Financing capital investments is a more complicated procedure, since these purposes usually require significant amounts of funds, and loan terms exceed 1 year.

Financial practice has developed various forms of loans. The most common is the so-called urgent, or ordinary, loan provided by the bank to the client for the intended use for a fixed period at a certain percentage.

Overdraft is a form of lending that provides the client with the opportunity to receive a short-term loan, usually without collateral, in excess of the balance on the current account within the limit established for it, the amount of which depends on credit history, the stability of average monthly turnover in the bank and other factors.

An on-call loan is provided to the borrower without specifying the term of its use (within the framework of short-term lending) with the latter's obligation to repay it at the first request of the lender. When repaying this loan, a grace period is usually provided (according to current practice, up to three days).

A revolving (automatically revolving) loan is provided for a certain period, during which both a phased "selection" of allocated funds and a phased partial or full repayment of obligations on it are allowed. The funds contributed to repay obligations can be borrowed again by the enterprise during the period of validity of the loan agreement within the established credit limit. Payment of the remaining outstanding amount of principal and interest on it is made upon expiration of the term of the loan agreement. The advantage of this type of loan is the minimum restrictions imposed by the bank, although the interest rate on it is usually higher.

An investment loan is a long-term loan (or line of credit) for the implementation of a project or program at an operating enterprise. Therefore, along with the standard requirements for the borrower's creditworthiness and collateral, when issuing such a loan, the bank carefully studies the business plan of the project (program) for which funds are requested.

A mortgage loan can be obtained from banks that specialize in issuing long-term loans secured by fixed assets or the property complex of enterprises as a whole. An enterprise pledging its property as a pledge is obliged to insure it in full in favor of the bank. At the same time, the property pledged in the bank continues to be used by the enterprise. It should be noted that mortgage lending to enterprises has not yet received due distribution in the Russian Federation.

Another popular form of debt financing in domestic and world practice is the issuance of bonds.

According to the legislation of the Russian Federation, bonds can only be placed by business entities by decision of the board of directors (supervisory board), unless otherwise provided by the charter. The decision to issue bonds must determine the form, terms and other conditions for their circulation and redemption.

The issued bonds must have a nominal value. At the same time, the nominal value of all issued bonds cannot exceed the amount of the authorized capital of the company or the amount of the net assets of its guarantor. Issue of bonds is allowed only after full payment of the authorized capital of the company.

The issue of bonds without collateral is allowed not earlier than the third year of the existence of a business entity and subject to the proper approval by this time of its two annual balance sheets.

Over the past few years, corporate bonds have become a popular tool for debt financing and attracting investment resources for both large and medium-sized enterprises. If in 2014 the volume of new issues amounted to about 187 billion rubles. (80% higher than in 2013), then in 2016 the companies attracted 380 billion rubles. The share of corporate bonds in the total volume of investments in fixed assets amounted to 6% at the end of the year. At the same time, almost all sectors of the national economy are represented on the market.

However, despite the obvious successes and prospects for the development of this instrument, the scale of the Russian bond market is significantly inferior to developed countries. Thus, the corporate bond markets of the leading European countries are 30-50 times larger than the Russian market. The total capitalization of the corporate bond market in the United States is $3.5 trillion. According to some estimates, up to 80% of the debt financing of American companies comes from bonds.

At the same time, bonded loans provide domestic enterprises with tangible advantages over bank loans and promissory notes, since they allow raising funds at a rate of 7 to 15% per annum for a period of 3 years or more, without requiring collateral.

In general, the following advantages of bonded loans can be distinguished, which make it possible:

• - increase the terms of borrowings (at present, the terms of circulation of bonds of domestic enterprises are from 3 to 5 years or more);
• - to form a public credit history of the issuer, which allows in the future to reduce the cost of borrowed resources and increase the terms of their attraction, as well as enter the international capital markets;
• - if necessary, use more flexible forms of security, such as third-party guarantees;
• - diversify sources of borrowing by increasing the number of creditors (investors), which reduces the cost, as risks are reduced and dependence on one creditor is eliminated;
• - promptly manage the debt structure by conducting transactions in the secondary market;
• - prepare conditions for the public offering of the company's shares, etc.

However, the issue and placement of bonds cost the company more than obtaining a bank loan.

The primary costs of issuing and placing corporate bonds include:

• - tax on operations with securities - 0.2% (but not more than 100,000.00 rubles) of the nominal value of the issue;
• - remuneration of the organizer of the issue --0.5--0.7% of the loan volume;
• - exchange commission - 0.035--0.075% of the loan volume;
• - depository's commission - 0.1+0.075% of the loan amount;
• - remuneration to the paying agent - up to USD 10,000;
• - presentations for investors - up to 20,000 US dollars.

In general, according to analysts, the average total cost of issuing corporate bonds in the Russian Federation is 1.5--3.5% of the total issue. Therefore, the minimum amount of issuance that makes it worthwhile to raise funds is currently approximately at least $10 million.

In addition, attracting such loans requires a significant investment of time (from 4 months) and organizational preparation.

The issue of bonds also involves the disclosure of information about the activities of the enterprise, which is not always acceptable for Russian business.

The needs of enterprises for continuous technical re-equipment, the introduction of new technologies, and the expansion of the production of goods and services have led to the emergence of new forms of capital raising, one of which is the use of such an instrument as leasing.

In the general case, leasing is an agreement according to which one party - the lessor (lessor) transfers to the other party - the lessee (lessee) the right to use some property (buildings, structures, equipment) for a certain period and on agreed terms.

Typically, such an agreement provides for the payment by the tenant of a regular fee for the equipment used throughout the entire period of its operation. At the end of the term of the agreement or in case of its early termination, the property is returned to the owner. However, leasing contracts often provide for the tenant's right to buy the property at a reduced or residual value, or to enter into a new lease agreement.

Operating (service) leasing is an agreement, the term of which is less than the full depreciation period of the leased asset (usually from 1 to 3 years). At the same time, the fee stipulated by the contract does not cover the full cost of the asset, which makes it necessary to lease it several times.

The most important distinguishing feature of operating leasing is the tenant's right to early termination of the contract. Such agreements may also include various installation and ongoing maintenance services for the leased equipment.

The main objects of operational (service) leasing include equipment that quickly becomes obsolete (computers, copying and duplicating equipment, various types of office equipment, etc.) and technically complex, requiring constant service maintenance (trucks and cars, airliners, rail and sea transport , construction equipment).

Financial leasing is an agreement providing for the special acquisition of an asset into ownership, followed by leasing (temporary use) for a period close to its useful life (depreciation). The payments under such an agreement generally provide the lessor with full reimbursement of the costs of acquiring the asset and providing other services, as well as a related profit.

The objects of financial leasing include real estate (land, buildings and structures), as well as long-term assets for production purposes. Therefore, it is also often called a capital lease.

Financial leasing is the basis for the formation of other forms of long-term lease - returnable and separate (with the participation of a third party).

After the expiration of the leasing period, agreements are drawn up for further use, acquisition of equipment into ownership or its return to the owner.