By Abhinav Ramnarayan
(Bloomberg) — The borrowing costs of European companies dependent on raw materials from Russia and Ukraine jumped as Moscow’s full-scale invasion of its neighbor heightened concern over supply lines running across the continent. European companies as diverse as U.K. chicken manufacturer Boparan Finance Plc, which needs gas and grain, and Swedish- Swiss cosmetics firm Oriflame Holding AG have been hit by the ongoing conflict. Russian President Vladimir Putin’s attack on Ukraine pushed everything from wheat to aluminum prices to new highs. Initial Western sanctions on Russia largely exempted the oil industry, leading to a recovery in markets. However the shock of the invasion, and the threat of worse to come, continues to reverberate through companies exposed to Russia. “Wheat prices, oil prices — everything is going to squeeze these guys,” said Justin Jewell, a high-yield portfolio manager at BlueBay Asset Management, referring to Boparan. He said BlueBay is also avoiding packaging firms because of the potential impact of higher energy prices. The possibility of a conflict has weighed on market sentiment for weeks, particularly on companies with direct exposure to Russian markets, such as oil and gas group Wintershall Dea GmhH, brewer Carlsberg AS and carmaker Renault SA.But the second-tier impact on firms that have no consumer base in the region but rely on their commodities is now sweeping through markets, hinting at further economic disruption set to follow the military action. Specter of More Inflation Haunts Credit Market as Oil Hits $100 French parts manufacturer Constellium and aluminum products maker Novelis Inc. are among companies likely to be affected, said Benjamin Sabahi, head of credit research at Spread Research. Oriflame’s second-largest color cosmetics plant is located in Russia, he said. Oriflame’s April 2026 bonds dropped to a cash price of 84.2 this week, its lowest so far. On the flip-side, European fertilizer producers and chemical crop producers such as Germany’s Bayer AG should benefit from any blockage in Russian exports. “Generally speaking, safe haven assets should be on the rise,” Sabahi said. Distressed Territory Boparan, the U.K.’s biggest poultry supplier, saw its 2025 bonds fall further into distressed territory this week, dropping 3 cents to 78.8 on Thursday, its lowest since November. It was little changed on Friday. Bonds of packaging companies Ardagh Group SA and O-I Glass Inc., both reliant on natural gas, fell to their lowest levels since 2020 this week. Boparan, Constellium, Oriflame and Novelis didn’t immediately respond to requests for comment. An O-I Glass spokesman declined to comment and an Ardagh Group spokeswoman said the company does not have any operations in Russia or Ukraine. Though oil and gas was not included in the Western sanctions, the suspension of the Nord Stream 2 gas pipeline between Russia and Germany hit utilities. German energy firm RWE AG’s 2033 bonds dropped to 93.33, close to an all time low hit earlier this month. While the cost of insuring junk bonds eased on Friday, erasing some of the previous session’s spike, the uncertainty is
still hurting bond sales. Friday is the 11th trading session in a row without a European junk bond deal, the longest run since the pandemic struck in March 2020.
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