issuers raised more than 340 billion rubles

The May holidays only slightly reduced the activity of corporate issuers on the debt market. Over the month, they attracted more than 340 billion rubles, showing the best result for May in the entire history of observations and the second this year. Maintaining high activity of issuers is facilitated by the regulator’s tough statements regarding monetary policy, as well as the continuing need to replace foreign financing.

According to Kommersant’s estimates, based on Cbonds data, the activity of corporate borrowers in May turned out to be a record for this month. They raised more than 340 billion rubles: almost 2.5 times more than a year earlier, and this is the second result since the beginning of 2023. According to the head of the debt capital markets department of BCS Bank Denis Leonov, placements took place even during the May holidays, which is “a rather rare occurrence for the Russian market.”

A number of placements by top issuers with very large one-time issues played a significant role. Among them are MMC Norilsk Nickel (60 billion rubles), Sberbank (56 billion rubles), Gazprom (45 billion rubles), NOVATEK (30 billion rubles). “Large issuers continue to look for opportunities to move from the Eurobond market to the domestic market. However, this process is hampered by a shortage of long-term money,” says Pavel Vintin, Director for Investment Banking Services and Operations in the Capital Markets of Rosbank.

Along with issuers of the first echelon, companies of the second and third echelons of different sectors – retail, development, IT – actively entered the primary market.

At the same time, for the majority of placed issues, the coupon rate was lowered compared to the initial benchmark, and the placement volumes increased, said Dmitry Monastyrshin, chief analyst at PSB. “Issuers are in a hurry to take advantage of the pause in the monetary policy of the Central Bank and the level of the key rate of 7.5%, which may be increased by the end of the year in response to increased pro-inflationary factors, which the regulator draws attention to,” VTB My Investments notes.

The risks of tightening monetary policy are pushing credit organizations to more actively attract financing. “For banks, bonds are interesting because they are long liabilities,” explains Dmitry Monastyrshin.

In May, bonds were placed not only by active participants in the primary market, Sberbank and VTB, but also Gazprombank, Alfa-Bank, Rosselkhozbank completed placements. Moreover, the placement conditions were better than before. In particular, Alfa-Bank placed bonds with a government bond yield premium of 150 bp. p., whereas at the end of March, the placement took place with a premium of 170 bp. Sberbank placed new bonds with a premium of 92 bp. p. compared to 106 b. n. when placed in February.

“We expect average activity in June-July and a seasonal dip in August,” says Mr. Vintin. Issuers’ activity will be supported both by the expectations of the Central Bank’s monetary policy tightening and by the need to raise financing. “Issuers need funds to replace Western funding, implement import substitution projects, build infrastructure to redirect export flows to new markets,” Dmitry Monastyrshin notes.

However, the transition from the Eurobond market to the domestic market is hindered by the shortage of long-term money in the local market. “Domestic investors have the resources, but prefer terms of three to five years, while Eurobonds have always had funds available from five to ten years,” says Pavel Vintin. Capital with an investment horizon of more than five years has always been insufficient locally, he adds, and now the shortage has only intensified.

Vitaly Gaidaev