Sovcomflot to convene Euro-bondholders meeting

Russian state-owned shipping company Sovcomflot will hold a Euro-bondholders meeting today. The objective of the meeting will be to assure

Sovcomflot shipping

Photo: Sovcomflot/Maritime Professional

Russian state-owned shipping company Sovcomflot will hold a Euro-bondholders meeting today.

The objective of the meeting will be to assure investors of the company’s ability to continue operating amid western insurance providers withdrawing coverage. While many western providers have voluntarily withdrawn coverage following the bloc’s ban on importing Russian oil, a proposal to ban the insurance of Russian tankers is being discussed within the EU and by other western powers—potentially exacerbating the problem for Russia. The ramifications of such a move would further limit Russia’s ability to export oil internationally, damaging an important revenue source for the Russian state. Further complicating the situation for Russia is that 95% of tanker insurance coverage is based in jurisdictions required to comply with EU law.

Currently, Sovcomflot is still able to cover its shipping through Russian insurance providers, suggesting that Russia will be able to continue relatively unhindered with its exports in the near-term. However, it is likely that Russian insurers will encounter financial strain in the longer-term from this coverage. Therefore, it is likely that Russia will attempt to diversify away from its own providers by finding insurance providers from friendly countries such as India or China to spread its risk.