In February, corporate borrowers increased activity in the domestic debt market

After a decline in January, the Russian debt market experienced a recovery in February. Companies and banks borrowed twice as much – almost 270 billion rubles. But the level is still more than 40% lower year on year. The activity of bond issuers may further increase against the backdrop of the easing of the Central Bank’s monetary policy, which is expected in the second half of the year.

According to Cbonds, corporate borrowers increased activity in the domestic debt market in February. During the month, they completed 111 bond placements totaling just over 267 billion rubles. This is more than double the January result, but 42% lower than the February 2023 values. For 19 issues totaling 16.5 billion rubles. In February, the technical placement period ended, but in fact they passed earlier, clarifies Alexander Ermak, chief debt market analyst at BC Region. The Cbonds statistics did not include placements for which only applications were collected in February. Taking into account these transactions, Alexander Ermak believes, the total volume would reach 503 billion rubles.

For the second month in a row, the bulk of placements fell on companies in the financial sector, including banks and development institutions.

According to Alexander Ermak, they accounted for two-thirds of the volume. It was mainly provided by Dom.RF mortgage bonds (RUB 45.5 billion, issued on the basis of Sberbank loans; see “Kommersant” dated February 19), as well as two SFOs (SFO “Standard-3” for 70 billion rubles and SFO “Salyut” for 100 billion rubles). “On the primary market, about 31% was occupied by bonds of the real sector with a total volume of more than 155.6 billion rubles,” notes Mr. Ermak.

The decrease in activity of issuers in the real sector led to a drop in the average size of transactions from almost 7 billion rubles. in February 2023 up to 3 billion rubles. Some large issuers are postponing placements due to the high key rate. In February, the Bank of Russia kept it at the level of 16% per annum, which is 8.5 percentage points higher than the February 2023 values. The activity of issuers, according to the head of the debt capital markets department of BCS CIB Denis Leonov, has flowed into the second and third echelons and into the VDO sector, for which “such rates are more acceptable.” The average transaction sizes of these issuers, especially VDO, are lower than those of first-tier companies. In February, 17 VDO issues accounted for only 8.47 billion rubles, that is, less than 0.5 billion rubles. for placement.

At the same time, market participants note an increase in the urgency of new placements.

If in December and January there were many placements for a period of 1–1.5 years, then in February, as Denis Leonov notes, there was only one. But the number of transactions with a maturity of two to three years has increased. “The changes occurred mainly due to the fact that a fixed rate for a period of two to three years may be significantly less than the key one,” he notes.

Due to the still tight monetary policy of the Central Bank, market participants do not expect a strong increase in the volume of market placements in the coming months. “Some issuers are postponing the placement of bonds until the second half of the year in anticipation of a reduction in the key rate, so we will probably see an increase in the number of placements after the start of the rate reduction cycle,” says Vitaly Sergeychuk, head of VTB’s corporate and investment business unit.

At the same time, Mr. Sergeychuk admits that companies that “cannot delay raising financing” will enter the market. They, according to the expert, will also use bonds with a floating coupon rate linked to the key rate or RUONIA.

As a result, according to VTB, the overall volume of corporate bond placements in 2024 will not be lower than 2023, that is, it will exceed 4 trillion rubles. excluding replacements, short-term bonds and private placements. Issuers from all major sectors of the economy will enter the borrowing market, Mr. Sergeychuk believes, since “financing needs remain, and international capital markets are not available.”

Vitaly Gaidaev