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After a lingering hangover from the crisis, banking practitioners are now saying far more optimistic things about the market. "The insolvency work had tapered off by spring 2010 and from the summer on we saw a lot of new money deals....

After a lingering hangover from the crisis, banking practitioners are now saying far more optimistic things about the market. "The insolvency work had tapered off by spring 2010 and from the summer on we saw a lot of new money deals. These were mainly for export credit agencies to begin with, but multinationals got involved too," comments one partner, while another hints at fresh financing mandates hitting the market: "I am optimistic as long as it continues like this. Summer looks to be very busy." Another banking partner agrees with the starting point of the upswing: "Since April it has been better, with activity in the market again."

"It has been almost 100% busier and we are looking for more hands in the department here," says a partner, while another positive has been the broadening of the market, with more borrowers able to get the capital they need: "The thing is, if you weren't blue chip 12 months ago it was very hard to lend. Now, you can."

However, it would be wrong to characterise the garden as completely rosy, as there are still issues. The main thing is that the structure of deals has completely changed, with lenders acutely more aware of risk after taking hit after hit during the crisis.

"In a sense, it is not a stable period. People want refinancing to get better terms," comments one lawyer, while another adds: "Credit conditions were not normal here. They still aren't normal really."

Banks are looking to eliminate risk as much as possible, while still covering themselves. This includes changing the way they are doing their lending. "Banks are now coming together more on a club basis, forming pre-baked syndicates," comments one partner. In all, it has made for a climate where deals are up on high wires, capable of being toppled without too much difficulty. "Structures are very delicate," says a partner.

There is also an indication that the market has become noticeably more stratified, as one partner puts it: "I don't want to sound too high and mighty but the work that has been around has come to the top, and we have done a good proportion of the transactions that have been done." This could have a knock-on effect on some of the more mid-market firms, as their client base is eaten into.

Lastly, the privatisation programme is something that is on the backburner, as lawyers wait for the big break which they hope will bring a slew of acquisition finance mandates. "In terms of privatisation, banks are looking at financing but with no success so far. This is a big trend though, and will happen in the near future," says one finance practitioner.

Capital markets in Russia have shown signs of picking up this year, especially on the debt side, with partners feeling comfortable enough to predict a healthy market state after something of a difficult 2010. "The markets have shown signs of life, unlike most of 2010," comments one partner, while another says that the previous year had flattered to deceive: "2010 had great promise at the beginning, but then deals began getting pulled and postponed....

Capital markets in Russia have shown signs of picking up this year, especially on the debt side, with partners feeling comfortable enough to predict a healthy market state after something of a difficult 2010.

"The markets have shown signs of life, unlike most of 2010," comments one partner, while another says that the previous year had flattered to deceive: "2010 had great promise at the beginning, but then deals began getting pulled and postponed."

Partners seem fairly upbeat about the most recent quarters though, as one says: "It's been busy actually, over the last seven or eight months it has anyway."

"The markets have been pretty busy, we have seen it coming back after the crisis," adds another.

Unfortunately, it would appear that, on the equity side, things aren't quite hitting the heights people would like: "The equity market is pretty repetitive of last year. Things began excitedly and enthusiastically, but then deals started getting pulled," says on partner and another agrees: "In equity there has been a lot of work on deals but the market itself hasn't lived up to expectations. There was a delayed demand, and pricing was a problem," explains another practitioner.

The debt markets aren't letting the side down though and have been increasingly robust: "Debt has been actually very active. There have been a number of new issuers doing work, high quality issuers too. There is a growing universe here and not just corporates and banks."

"Eurobonds will stay strong for high quality issuers, but not if you're not blue chip," comments another debt practitioner.

Something that has gone unnoticed is regulation, which hit the books in 2009, allowing the listing of foreign securities in Russia. According to one partner though, "none have been done yet except for the European Bank for Reconstruction and Development (EBRD), who got a special dispensation to do so."

It is something that could be positive for the market though: "This could develop, it's a possibility. Economically it makes sense as there is a lot of liquidity here," says a partner.

Continuing the trend from last year, securitisation is still very much absent, with only the merest flickers of interest apparent: "Securitisations are still passive, but people are talking. Last year they were a non-starter," states a partner, optimistically.

The big story in the markets from Russia however is the merger between Micex (Moscow Interbank Currency Exchange) and RTS (Russian Trading Systems) which, despite being put off from its original completion date, will go through before the end of the year.

"It's definitely a good thing for the financial market. It will simplify the approach for brokers," says a partner, while another reflects the wider, strategic goal of the Russian government behind the merger: "The name of the game is consolidation. It's all about making Moscow develop into a stronger financial centre."

"The broad theme is that they want to make Moscow a world financial centre and are looking to do so through infrastructure and improving accessibility," concurs another partner.

How the eventual new market will be run is a concern however: "The markets merger is, if you read between the lines, government-imposed. The derivatives one is run by younger, more entrepreneurial people, while the equity one is a little more traditional. The outcome all depends on who is got in to run it afterwards, from one of these two areas," explains an equity partner.

Finally, lawyers are finding themselves having to work to a constricted timetable, as they perceive a sort of window for deals this year which will begin to inch towards closing as the run-up to the elections begins.

"There are elections for the Duma in December, and for the presidency in March. We don't expect a change of the person at the top or a massive regime change but there might be certain changes, different approaches," says one partner, while another explains the direct effect this can have: "Russians are unsettled at the moment, and these elections will be something of a drag on economic activity. Deals will need to be done by the fall or you'll then see them being left until after the elections."

It would appear that the M&A market in Russia has been in the vanguard of the economy's recovery, getting back to its feet in a big way over the past six, if not the full twelve months. Partners are finally starting to feel they have turned the corner and all are forthcoming as to their positive outlook for the future....

It would appear that the M&A market in Russia has been in the vanguard of the economy's recovery, getting back to its feet in a big way over the past six, if not the full twelve months. Partners are finally starting to feel they have turned the corner and all are forthcoming as to their positive outlook for the future.

"This time last year I would have said cautiously optimistic - now I would say just plain optimistic," says one partner, while another is just as keen: "The M&A market was the first to recover from crisis really, more strongly than banking definitely."

"This year has been very good. M&A has made a breakthrough compared to other years. The trend is definitely upwards," agrees another practitioner while a third adds: "Very busy indeed. It's been an extremely good year. In terms of revenue it's a dramatic improvement."

Summing up, one active corporate lawyer comments: "2010 has been very good. It's rebounded back a lot faster than I thought it would. 2009 was a dead zone, but we are pulling out of the woods now."

The salient question is how this activity finally got on the upswing, and again partners have varying opinions.

"Basically, a common understanding of pricing came about," explains one partner simply, while another points to political considerations: "Some of this could be put down to pre-election movement. People do try and get deals done before."

One practitioner simply has the view that inertia had been reached and something had to happen: "There is not a huge amount of new money, they are mainly on-balance sheet deals. The players dusted themselves off and got involved. I mean, there's only so long you can stay on the sidelines."

A solid opinion on this is that investment from outside the country had dried up: "The problem was there was a dearth of international investment. It was more consolidation," though this a trend that appears to be reversing now as the market notes that interest from China and India is growing, especially with regard to natural resources.

"I've seen a couple of new trends. One is that more international investment is coming back and there is still a lot of Russia-to-Russia work. Due to the dearth of work firms fixed on Russian market activity," comments one partner, pointing to a continuation of a trend that arose last year.

In terms of legislation, there is some debate among corporate lawyers as to the state of the law in Russia at the moment, on one side people feeling that it is still rather inflexible, while others are insisting it is finally harmonising with other systems.

"There is an increased complexity of deals and Russian law is too rigid for it. It is underdeveloped," says one, while a peer comments: "A lot of shareholder agreements were drafted under English law, using offshore holding structures. Now you can do this direct in Russian law. It is a case of Russian law catching up, and I don't mean that pejoratively, with UK and US law. The law here is definitely more user-friendly now."

The market is also being driven by oil prices and partners are also looking to the mooted state privatisation scheme, though with a wary eye. It could provide a lot of work for firms as investors get involved from outside, but there are some potential issues.

"I do have concerns that the privatisation will go a bit like the old days, with 'friends' buying up these strategic companies and then selling them on. It's not exactly transparent," warns one partner, while another adds: "There is a lack of transparency for these strategic companies anyway."

It is also the case that the foreign acquisition of some of these stakes will be subject to government approval, due to them being deemed 'strategic enterprises' by the Russian government. "The things considered strategic are anything defence-related, obviously, but also natural resources, oil and gas and media – anything potentially sensitive," clarifies a partner.

Overall though, one partner feels that this federal law will not present too much of an obstacle: "It is complicated process, yes. But I feel it's fair enough for the government to do this; it takes know-how to get these things out of the ground, why should all that wealth be taken out of the country? I'm also not sure if the complexity will put people off investing in these strategic enterprises. The people who would do this are usually sophisticated, and can cope with these kinds of processes."

After a somewhat depressing period from 2009 through 2010, project finance is showing some signs of life in Russia, with flickers of interest becoming more apparent and new areas for financing opening up."The market has never been so good for us....

After a somewhat depressing period from 2009 through 2010, project finance is showing some signs of life in Russia, with flickers of interest becoming more apparent and new areas for financing opening up.

"The market has never been so good for us. It is the busiest I remember for about five years," comments one enthusiastic partner. Others are not quite as optimistic though: "It hasn't necessarily been the most active year for project finance," says another partner.

Despite the number of projects still being relatively low, this positive tint on things has filtered down, with a number of new and developing areas starting to provide mandates for firms. Particularly active is energy and power, traditionally strong in Russia but which is branching into new areas too, such as nuclear power.

"Nuclear power is an interesting question. There are definitely projects under discussion, based on a project finance structure. "It might not necessarily be this year, but next year this will be big." It is also the case that Russia has signed a MOU with Turkey to build a nuclear plant in the country, but fears brought into sharper focus by the terrible events at Fukushima have put the skids under the uptake of this type of power deal.

Another interesting trend in the energy market is the diversifying of investment in the oil industry, which has had a knock-on effect for project financing. Whereas in the past work went 'upstream', i.e. toward exploration and recovery of crude and gas, there is now a strategic push to engage with the 'downstream' aspect too, such as the actual refining and distribution. "Historically the work goes upstream, but we are now seeing investment downstream. The Russian government are looking to encourage investment downstream, to refine and keep the value in-country," explains one energy partner.

Traditional power work continues to be strong as well too, even if it is primarily domestic. "There is an increase in power jobs at the moment. It is mainly Russian players who want to restructure power development," comments one lawyer.

Another partner however contradicts this view, and states that the Brics countries, the emerging, thriving markets in Brazil, India, China and also South Africa now as well as Russia, are taking advantage of this network and collaborating on more deals. "We are also advising a Chinese player on power investment. There has been increased investment between Brics countries overall," notes one practitioner.

Continuing a trend first recognised last year, waste management, water and other specialist utilities are still projects that are drawing interest from investors, so says one partner: "Utilities is actually becoming a key sector, and will be a big part of Russian project finance for the future." Related to this, another partner adds: "There is a lot of hope for the future of Russian PPP (public-private partnership)."

The biggest news in the market has to be the new project finance law, a draft of which is said to be out before the Duma very soon. Partners are almost wholly united in their keenness on these new developments, which they see as essential if project finance is to have the legislative shackles taken off it and be allowed to thrive.

"The new law looks to make project finance more straightforward," says one partner, while another explains why the law has to be altered: "Coming from a common law jurisdiction it is strange as the legislation here is new and untested. You have to be careful as if it isn't obviously permitted you can have problems. There are concepts seen as usual in other countries that we'd like here too."

"One change will be the concessions legislation. It will make it easier to secure projects. It also brings in a lot of other important things, such as certain types of security for bank accounts related to projects," observes a partner, though some others do hedge their excitement a little: "It will bolster the laws, though we hope it doesn't bring more problems than it fixes." Another agrees with this cautious approach: "If the new project finance law comes in the form we want, it will be helpful. A lot of people are sceptical though."

Overall this new law does seem a positive move, especially in light of the global events requiring substantial infrastructural work that are coming to Russia in the next decade or so, as one partner explains: "If you read it you would be pleased, as it introduces a number of new things that are absent and should really be there. I think it passing will lead to a renaissance in project finance in Russia, something that will be necessary for the Winter Olympics [2014] and the World Cup [2018]."

As the market begins to show positive signs across various practice areas, albeit at different levels, this optimistic outlook has a knock-on effect on the restructuring and insolvency sector, mainly as work atrophied as companies no longer had the need to resort to these measures.On being asked what the big trends were in the market, one lawyer replies: "This is not an easy question as there hasn't been hardly any restructuring around....

As the market begins to show positive signs across various practice areas, albeit at different levels, this optimistic outlook has a knock-on effect on the restructuring and insolvency sector, mainly as work atrophied as companies no longer had the need to resort to these measures.

On being asked what the big trends were in the market, one lawyer replies: "This is not an easy question as there hasn't been hardly any restructuring around."

"Around last summer we were tidying up the remaining restructurings and then we only have one other deal that has not quite reached the overwrite stage," adds another.

In a trend that arches over from the banking practice, it is more the case that people are coming back to the market to renegotiate deals they had before, to get better terms. One partner agrees: "The work at the moment is more refinancing then restructuring."

As one partner notes, any insolvency work too had really been done by the spring of 2010. However, analysis of this side of the practice has to be taken against the background that there is, essentially, not really an insolvency culture to speak of in the Russian market. This is a cultural thing really, as one partner explains: "Companies will almost always try and sit it out. For example, steel prices tumble and instead of restructuring or declaring, a certain steel company wanted to wait for prices to come back up instead! There is overall a general reluctance to come to the negotiation table."

This is one view, but other partners point to another reason why insolvency is not turned to in Russia. "There isn't a lot of insolvency, as no one trusts the processes," comments one, while another describes getting a decision in the courts as "a crapshoot"."People are loath to get in front of Russian courts. For small and medium things yes, maybe, but if there are big stakes they tend not to go to court," he explains.

Perhaps in response to this, firms do not have teams that focus specifically on Russia, but also the surrounding, ex-CIS (Commonwealth of Independent States) jurisdictions too. "There has been an awful lot of restructuring work still for us, but our team does not just work in Moscow but in the region too, in Kazakhstan and the Ukraine," says one partner on their firm's strategy in this area.