The sector really occupied – Newspaper Kommersant No. 39 (7484) dated 03/07/2023

February 2023 was a record for this period of the year in the Russian domestic borrowing market. Corporate borrowers have completed the placement of bonds for 327 billion rubles, and not only companies in the real sector of the economy, but also banks are actively placing securities. Companies are in a hurry to attract financing against the backdrop of tightening the rhetoric of the Central Bank, which promises a possible rise in the cost of borrowing.

According to Kommersant’s estimates based on Cbonds data, corporate borrowers significantly increased activity in the domestic public debt market in February. Over the month, they attracted almost 327 billion rubles, which is almost 12 times more than borrowings in January (28 billion rubles) and seven times more than in February 2022 (66.8 billion rubles). This is the best result for this month, the previous record was set in February 2021, when the companies raised just over 290 billion rubles.

According to Alexander Yermak, chief analyst of debt markets of BC Region, last month the largest share of placements (more than 60%) fell on bonds of the real sector.

The volume of 17 placed issues amounted to almost 190 billion rubles. Moreover, in the first half of the month, the largest transactions took place – RusHydro (35 billion rubles), Gazprom Capital and Magnit (30 billion rubles each), Polyus (20 billion rubles).

Banks also actively placed bonds, which for almost the entire last year refrained from entering the market with classic debt securities. Five banks, including EDB, made placements for 97 billion rubles, with Sberbank placing two issues for 62 billion rubles.

“According to the results of many collections of applications, there was an increase in borrowing volumes and a decrease in the first coupon rate by 15–25 basis points from the initial benchmark against the backdrop of oversubscription,” notes Mr. Yermak. Thus, Segezha and Etalon placed bonds 1.5-1.6 times more than the originally announced amount, Alfa-Bank – 2 times more, RusHydro – 2.3 times more.

The high activity of issuers was facilitated by increased inflationary fears in the market and tougher rhetoric of the Central Bank. Following the results of the February meeting, the regulator expectedly kept the rate at the level of 7.5%, however, in a press release notedthat in the event of an increase in inflationary risks, the expediency of raising the rate at the next meetings will be considered. As a result, the Central Bank raised its forecast for the key rate range for 2023 to 7–9% from 6.5–8.5%.

The statements of the Central Bank, according to Denis Leonov, head of the department of debt capital markets at BCS Global Markets, prompted many issuers to hurry up with placements.

“Inflation is becoming more volatile, and the Ministry of Finance’s budget deficit management policy is becoming less transparent, which together creates pressure that manifests itself not in the dynamics of rates, but in market activity – turnover, new transactions, etc.,” notes the department’s analyst analysis of financial markets of Sovcombank Arseniy Avtukhov.

But in early March, the activity on the primary market declined. This situation, according to Alexander Yermak, will drag on until the next meeting of the Bank of Russia, which is to be held on March 17. The market does not expect an increase in the key rate in March, but they expect new signals from the regulator. “Radical changes in the activity of issuers should not be expected until the change in monetary policy by the Bank of Russia, inflation statistics or any large-scale phenomena in the economy,” notes Denis Leonov.

At the same time, active placements of yuan bonds, which were popular among issuers at the end of 2022, are not expected on the market. “This segment of the market has not yet fully formed, and a sharp increase in rates is expected on it, which scares away both issuers and investors,” says Pavel Vintin, director of investment banking services and capital markets operations at Rosbank. According to Arseniy Avtukhov, the surplus of yuan liquidity in the banking system, which may be formed due to the sale of foreign currency from the NWF, can change the situation. In January and February, as part of the budget rule, the Central Bank sold RMB 215 billion on the open market. (about 21.5 billion CNY).

Vitaly Gaidaev