Rare metals market

MMC Norilsk Nickel revived the Russian debt market, which has been stagnating for the past two weeks, by collecting a book for 25 billion rubles. At the same time, the yield of securities to a three-year offer amounted to almost 10% per annum. The main buyers were institutional investors, according to market participants. Against the backdrop of growing volatility in the market, these investors are looking with interest at the issues of high-quality issuers, although they demand a noticeable premium to the secondary market for their participation.

On Thursday, October 6, MMC Norilsk Nickel closed the book of applications for the placement of five-year bonds in the amount of 25 billion rubles. The placement was organized by Gazprombank, MCB, BC Region, Rosbank and Rosselkhozbank. The first coupon rate was set at 9.75% per annum, 10 basis points (bp) below the original guidance. Yield to offer in three years amounted to 9.99% per annum.

The placement of Norilsk Nickel was the largest market placement in a month. In early September, DOM.RF placed three-year securities worth 30 billion rubles. with a yield of 8.85% per annum. Among the issuers of the real sector, the largest market placement in September was the issue of four-year bonds of RusHydro, the demand for which amounted to 106 billion rubles, which allowed the company to increase the placement volume from 15 billion rubles. up to 20 billion rubles and reduce the rate from 9.15% to 8.5% per annum.

In the last two weeks of September, the activity of issuers on the Russian debt market was low due to greatly increased volatility against the background of growing geopolitical risks and tightening of the rhetoric of the Bank of Russia (see “Kommersant” dated October 4). The yield of medium-term OFZ rose to 8.9-10.4% per annum.

The Ministry of Finance refused to hold auctions for the placement of government bonds for three weeks in a row.

“A number of corporate issuers who clearly intended to enter the primary market at the end of September with placements (according to Kommersant’s estimate, in the amount of about 40 billion rubles— “b”), have suspended their plans until the situation normalizes, or at least until some certainty appears in the economy and politics,” says Pavel Kapustyuk, asset manager of Ingosstrakh-Investments Management Company.

Since the beginning of October, OFZ yields have fallen by 20-50 bp. p., up to 8.7-10.1% per annum, but remain close to the highs since May of this year. In the current conditions, the company was forced to give a premium to the market. “The differential to the corresponding value of the zero-coupon yield curve amounted to about 105 bp. etc., which is higher than the average historical spread for a representative of the issuer of the upper echelon of borrowing, and the potential for its narrowing is significant,” notes Mr. Kapustiuk.

Interest in the issue was shown, according to market participants, mainly by institutional investors, as individuals prefer more profitable securities from the second and third tiers.

“Institutional interest in this issue may be due to the fact that MMC does not have so many issues in circulation, and besides, in the last few months there were not so many issues from the first echelon with AAA rating,” the portfolio manager of the UK believes. Opening” Ruslan Mustaev. “While the Ministry of Finance maintains a pause with new placements, investors need to reinvest incoming coupon payments somewhere,” notes Alexei Tretyakov, head of Arikacapital.

Although interest in the placements of high-quality issuers remains, portfolio managers do not expect their active entry into the market. According to Ruslan Mustaev, issuers will wait for a suitable yield window. At the same time, improvement in market conditions is possible only as the news background improves and uncertainty on the Russian market decreases. “At a minimum, we should expect the return of those who announced plans for borrowing shortly before the latest events – Cherkizovo, Novotrans, Selectel, as well as whose bond programs were registered in the last one or two months,” notes Pavel Kapustyuk .

Vitaly Gaidaev