Corporate borrowers placed bonds worth more than 0.5 trillion rubles in March

March turned out to be successful for the domestic public debt market compared to February: corporate borrowers placed bonds worth more than RUB 0.5 trillion. Almost half of the volume came from Rosneft’s yuan securities. In ruble bonds, first-tier issuers still prefer to place securities with a floating coupon, in which not only institutional but also private investors are showing interest.

Russian issuers are restoring activity in the domestic debt market. According to Cbonds, in March, corporate borrowers placed 122 bond issues worth RUB 543 billion. This result was more than double the February figure, although it was 5% lower year-on-year.

For the first time since the beginning of the year, the main activity was observed on the part of companies in the real sector, which accounted for more than 85% of the total volume of placements.

More than two thirds were provided by two issuers – Rosneft (for 20 billion CNY) and MMC Norilsk Nickel (for 100 billion rubles).

The oil company’s yuan bonds were placed among a limited circle of investors: according to the Moscow Exchange, only three transactions were concluded. But the issue of Norilsk Nickel bonds was distributed among more than 1 thousand investors. The securities were placed with a variable coupon – the key rate increased by 1.3 percentage points, which for the first coupon was 17.3% per annum, which looked very attractive even against the backdrop of high deposit rates.

Private investors actively participate in many placements of both highly reliable issuers and second- and third-tier companies. In particular, the bonds of the company “Brusnika. Construction and development” in the amount of 7.5 billion rubles. and a coupon of 16.75% per annum was purchased by more than 25 thousand investors. In the placement of bonds of the retailer O`Key in the amount of 3.5 billion rubles. and a yield of 15.5% per annum, more than 5 thousand transactions were registered. “The abundance of retail investors allows second- and third-tier issuers to greatly reduce the final coupon benchmark as part of collecting the order book,” notes Arseny Avtukhov, an analyst at Sovcombank’s investment analysis department.

The activity of retail investors reached its peak at the end of February – the first ten days of March, notes Denis Leonov, head of the debt capital markets department of BCS CIB, but decreased before the Central Bank made a decision on the key rate in March.

The Central Bank kept the rate at 16%, noting that current inflation pressure remains high, although it is gradually weakening. “Towards the end of the month, we noticed a change in sentiment among retail investors to less optimistic ones,” explains Mr. Leonov.

When choosing securities, private investors focus on market conditions, transaction parameters and, first of all, profitability. Important importance, as Denis Leonov notes, is brand recognition and consumer characteristics, the industry and its specifics. “In the end, successful transactions among private investors are those that are interesting on at least several points; it is almost impossible to single out just one,” says Denis Leonov.

Market participants expect further growth in the activity of first-tier issuers. According to Arseniy Avtukhov, the increased interest of retail investors creates a favorable environment. However, he does not expect a boom in placements.

The level of the key rate continues to be a restraining factor. Therefore, when choosing instruments, high-quality issuers will prefer bonds with a floating coupon linked to either the key rate or the RUONIA interbank deposit rate. “Active placement of floaters may continue at least until the end of the third quarter,” says Pavel Paevsky, senior analyst at RSHB Asset Management.

Vitaly Gaidaev