The Central Bank of Russia (CBR) is considering limiting companies' foreign borrowing in case of excess debt. Russian banks and companies have raised around $15bn in the year to date from the global markets, $13bn of which was placed by companies and only $2bn by banks.

“Given the increasing appetite for risk on the global markets, the CBR is considering the possibility of monitoring and limiting the excessive appetite for foreign debt,” Natalia Orlova, chief economist at Alfa Bank said in a note. “At the moment, the regulator has already scrutinised the debt figures of 53 local companies and may proceed with its intention to control foreign risks, elaborating some currency risk related indicators. We consider this measure appropriate to control the dynamics of quasi-sovereign debt.”

As of April, Russian state banks and companies owed around $200bn of foreign debt, which could easily become the obligations of the Russian state in addition to the $50bn of its direct foreign obligations, Alfa Bank believes.

Russia may be under sanctions, but the list of banks and companies under those sanctions is very short. All the other Russian banks and companies are free to borrow abroad – and they are doing so.

When the sanctions were first introduced in 2014 the list was extended several times and that made all Russian entities – on the sanctions list or not – toxic to compliance departments in the West as the risk of dealing with a company that could be sanctioned was deemed too high.

However, as the sanctions regime moves into a stalemate, compliance departments have become more relaxed about doing business with Russian firms and banks so the deal flow has restarted.

There is a long tradition of Russian banks and firms borrowing abroad longer and cheaper, and the international capital markets remain a major source of funds. Indeed, with the CBR’s overnight rates at 9% – despite multiple cuts since 2014 when rates were hiked to 17% following the collapse of the oil price – the cost of borrowing at home is still exorbitant.

However, the enthusiasm for foreign debt is starting to cause problems. Not only is the CBR worried about the growing external debt, the lack of action on the home market is a problem for banks as corporate borrowing from domestic banks has been falling since January 2016.

That cuts the banking sector off from a major source of income. While retail lending is showing its first green shoots of recovery, retail credits still only form a small part of the credit business.

The enthusiasm for foreign borrowing is clearest in the rising number of Eurobonds that Russian companies and banks have been issuing in the last year, as bne IntelliNews reported in its CEE monthly bond market wrap. This year’s issues are running well ahead of last year’s and will continue to for the rest of the year, say experts. The rising bond issues almost exactly mirror the falling corporate borrowing volumes.