The high-yield bond segment set a historic record in September

In September, the high-yield bonds (HYB) segment set a historical record of RUB 6.9 billion. placements per month. The autumn peak of placements in the segment occurred along with a local minimum of corporate borrowings in the broad market. A number of experts believe that a “bubble is inflating” in the market in the segment of the lowest ratings: the profitability in them does not cover default risks. However, market participants do not expect problems with VDO at least until the end of the year.

In September, the VDO segment (bonds with a credit rating no higher than BBB) set a historical record of RUB 6.9 billion. placements for the month, adding 0.5 billion rubles. to the May peak, follows from the review by Oriole Capital (available to Kommersant).

The autumn peak of VDO placements occurred in parallel with a local minimum of corporate borrowings on the broad market. September 285 billion rubles are the worst overall market result in six months. Thus, the share of VDO in the total mass exceeded 2%.

Based on the results of nine months, the volume of the VDO market amounted to 110 billion rubles, which is 11.4% more than the results of the first half of the year. Market concentration continues in the three largest industries: development, microfinance, leasing industry, the total share of which exceeded 50%. The risk premium for the VDO segment was at its lowest level since the beginning of observations (270 basis points, bp), which is significantly lower than the median spread of the current year (490 percentage points, p.p.).

Many companies were in a hurry to jump into the last carriage of the departing train and borrow at somewhat acceptable rates, says Maxim Chernega, head of the DCM department of the corporate finance department at Tsifra Broker.

For VDO, a premium of 500 bps is considered normal. p. to the key rate, notes Mr. Chernega. That is, now the VDO market should give a profitability of around 18% per annum, he clarifies. In fact, the profitability is at the level of 16% and even lower. “Investors have not yet adjusted to adequate returns, and issuers, including those taught by the bitter experience of past years, when they waited for rates and then had to borrow at a higher price, were in a hurry to place. This led to the fact that the VDO market showed itself this way,” the expert said.

The main investors in the VDO segment, as before, remain individuals, says Managing Director of Ivolga Capital Dmitry Alexandrov. “Mostly VDOs are bought by individuals (75–100% of placements) – qualified investors,” Mr. Chernega agreed. “There are very few corporates.”

In Mr. Alexandrov’s opinion, a bubble is inflating in the segment of the lowest ratings (B): the yields in them do not cover default risks, and the prices for such securities have not been adjusted in proportion to the key rate. “This may be due to the historically low default rate of the segment, but there were no defaults in a fairly strong market. Now, in the conditions of a strict monetary policy over a long horizon, many risks in the segment may materialize, which will lead to a revaluation of fair yield levels,” he added.

Risks, according to Mr. Aleksandrov, may begin to materialize as early as the fourth quarter, but the expert still expects the main effect already in 2024. “In my opinion, the volume of placements in the last quarter will fall compared to the third; by the end of the year we may see placements of another 12–15 billion rubles,” he explained.

The rapid growth of placements in the VDO segment is explained by the expansion of interested investor segments, says independent financial analyst Andrei Barkhota. Over the past one and a half to two years, the differentiation of credit ratings and credit analysis in general has changed significantly, he noted. As a result, the difference between issuers with AA and BB ratings became much narrower, and investors began to evaluate the yield differential for such securities not as 3.5–5.0 percentage points, but as 1.5–2.0 percentage points. , the expert explained: “At the same time, buyers of VDOs have an understanding that new sanctions will primarily hit issuers of the first tier of bonds.” Mr. Chernega does not expect mass defaults, believing that “the market will pass quietly for the remaining period until the end of the year.”

Ksenia Kulikova