The activity of corporate borrowers in the domestic debt market was record high

Last year was the most successful year in history for the domestic debt capital market. At the end of 2023, issuers raised over 5.2 trillion rubles, and in December alone the volume of borrowings amounted to almost 1.4 trillion rubles. High activity of issuers will continue in 2024, but due to a decrease in bank lending volumes, the main consumers will be companies in the real sector.

The activity of corporate borrowers on the domestic debt market in December 2023 was record-breaking, according to Cbonds data. During the month, issuers borrowed almost 1.4 trillion rubles, which is 50 billion rubles. above the all-time high in December 2022. At the end of the year, companies and banks placed debt securities worth 5.2 trillion rubles, which is one and a half times higher than in 2022 and the best result in the entire history of the Russian debt market. “The past year clearly showed that the debt market can not only exist in an environment of rising rates, but demonstrate absolutely record values ​​in terms of the volume of placements,” notes Rustem Kafiatullin, director of the debt capital department of the Sinara investment bank.

The main contribution to the volume of placements in 2023 was made by companies in the financial sector (credit and other financial institutions), whereas a year earlier they were inactive. Such issuers, according to the assessment of Alexander Ermak, chief debt market analyst at BC Region, accounted for 50.7% of the total volume of placements, with banks borrowing a total of 1.19 trillion rubles, and other financial organizations – 1.77 trillion rubles. (mainly due to the development institutions Dom.RF and VEB.RF).

A characteristic feature of the primary market was a significant consolidation of issues. About 56% of the total volume of placements accounted for 52 largest transactions with a volume of 30–220 billion rubles. “One of the reasons for this was the increase in bonds with a floating coupon, which were placed in 2023 for a total amount of 1.75 trillion rubles,” notes Mr. Ermak.

In 2024, the market does not rule out improved results. Denis Leonov, head of the debt capital markets department at BCS CIB, points out that the activity of issuers in the market is already higher than in January 2023. In particular, on January 19, KamAZ completed the collection of applications for two-year ruble bonds; as a result, due to high demand, the placement volume was increased from 5 billion to 10 billion rubles. “Now a number of issuers who need financing are already monitoring the moment of entering the market,” notes Tatyana Ambrozhevich, head of the Rosbank debt capital markets office.

Market growth will occur mainly due to issuers of the real sector, while the activity of banks will decrease. As Alexey Bulgakov, head of the debt market analytics department at Renaissance Capital, notes, classical commercial banks issue senior bonds during a period of rapid asset growth, when there are not enough client liabilities for lending growth. This year, due to high rates, a strong slowdown in lending growth is expected. Renaissance Capital estimates that they will fall from 25% in 2023 to 4%.

In general, the situation on the market will greatly depend on the rhetoric of the Central Bank regarding further monetary policy, including the timing of the transition to reducing the key rate. Analysts surveyed by Kommersant expect the first rate reduction in the second or third quarter. “The more optimistic the Central Bank is in its comments and forecasts, the more actively investors will try to fix a higher rate, and issuers will take advantage of the increased demand to reduce the borrowing rate during the formation of the order book,” notes Alexander Kovalev, executive director of the capital markets department of Sovcombank.

At the same time, priority when placing bonds will return to transactions with a fixed coupon, says Tatyana Ambrozhevich. “If issuers remain interested in floating rate bond placements, then institutional investors will look at floaters with much less appetite than before,” notes Mr. Leonov.

The market is not expecting strong growth in the local currency bond market, although almost all major exporters are interested in attracting such financing. According to Alexey Bulgakov, there is not enough such liquidity in the market. “Periodically, issues in yuan will take place,” believes Alexander Kovalev. “However, basically they will be similar to syndicated loans due to the lack of long-term yuan in the market.”

Vitaly Gaidaev