What happened
Companies affiliated with Russia have fallen out of favor with investors, but one that has managed to do better than others recently is veteran telecom Veon (NASDAQ: VEON). The company's stock was also an outperformer on Friday, rising by over 3% as the S&P 500 headed south at a 1.3% clip. The company had encouraging news to report on the financing front, hence the positive reaction from the market.
So what
Veon is a big telecom headquartered in Amsterdam, but it originates from -- and conducts much of its business in -- Russia. As a result, it has also for years actively conducted financing activities in the country.
On Friday, the company announced that one of its financing arrangements, a 30 billion-ruble loan from state-owned lender VTB Bank, had been retired. Veon said the loan was paid back "in accordance with its terms," at a rate of nearly 116 rubles to the U.S. dollar, putting the total amount at roughly $259 million. Veon took pains to add that it has no other loans outstanding with the Russian bank.
Image source: Getty Images.
The announcement came shortly after the company issued an update about its indebtedness, saying that it had retired more than $400 million in borrowings that were to come due early this month. It asserted that it has access to ready cash in currencies that are not rubles.
That was very comforting for investors, as the ruble has been hit hard by economic sanctions aimed at Russia and plummeted in value recently.
Now what
However, the core of Veon's business remains in the countries of the former Soviet Union, like Ukraine and Russia. By virtue of that fact alone, investors should exercise extreme caution. No matter how positive its financing situation, it's a stock best avoided for now.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
