Wider debt – Newspaper Kommersant No. 64 (7509) of 04/13/2023

More untested bond issues may become available to unqualified investors. Market participants welcome the expansion of investment opportunities for citizens. However, the innovation also contains a number of risks, in particular, the forced liquidation of positions when the issuer’s rating falls below A–.

The Bank of Russia is going to discuss with professional participants in the securities market and experts new opportunities for diversifying the portfolios of unqualified investors, a representative of the regulator told Kommersant. In particular, the Central Bank proposes to soften the requirements for the level of investment rating of bonds of Russian issuers, which are purchased without testing, lowering it from AAA to A level. the number of high-quality bonds of Russian issuers available to the investor is significantly increasing,” the Central Bank said.

All OFZs have the highest credit rating, although the state does not formally have a credit rating. Moscow, St. Petersburg, Khanty-Mansi Autonomous Okrug, YNAO also have it. Among corporate issuers, Sberbank, Rosneft, Gazprom, Russian Railways, VTB, Norilsk Nickel and a number of others have the highest rating. According to Mikhail Nikonov, junior director for corporate ratings at Expert RA, they account for a significant part of the debt market – 18 trillion rubles. OFZ, more than 11 trillion rubles. corporate and about 200 billion rubles. sub-federal bonds. At the same time, the expansion of securities available for the rating for unqualified investors in terms of volume will be small – 4.2 trillion rubles. for corporate and 428 billion rubles. on regional bonds, the expert estimates.

At the same time, in terms of the number of issues (as well as issuers and industries), the expansion will be more significant. At the moment, there are about 500 AAA-rated bond issues on the market (excluding structured bonds), and expansion to A level will increase the number of issues available for purchase to 1.1 thousand issues, estimates Maxim Chernega. The number of available issuers will increase from four dozen to 150, the expert points out. Among them are Gazprombank, Alfa-Bank, RSHB, PSB, AFK Sistema and others.

Investors win by the size of the bet. In particular, the yields of bonds with AAA rating are 7.5–9% per annum, while those with AA rating are 8.5–11% per annum, and those with A rating are 9.5–13% per annum. At the same time, according to the data of the default matrix from Expert RA, the probability of default by an issuer with an AA rating on the horizon of one year is 0.23%, and with an A rating – 0.75%, on the horizon of two years – 0.57% and 1.95% respectively.

Interviewed by Kommersant, market participants positively assess the initiative of the Central Bank. The professional community has repeatedly drawn attention to the fact that the AAA rating is greatly inflated, says Andrey Salashchenko, Deputy General Director of Otkritie Investments. The proposal of the Bank of Russia will largely expand investment strategies for unqualified investors and help them reduce the risks of portfolio volatility through greater diversification, believes Dmitry Lesnov, Head of the Customer Service Development Department of FG Finam.

However, the innovation also carries a number of risks, Kommersant’s interlocutors warn. Issuers with an A rating need to be analyzed much more carefully than those with AAA, notes Artem Autlev, an analyst at Ingosstrakh Investments. According to him, in the context of sanctions pressure on businesses, as well as non-disclosure of financial statements by individual companies, it can be quite difficult for unqualified investors to quickly assess the debt burden and solvency of the issuer. A drop in the issuer’s rating below A- may lead to the forced liquidation of the investor’s positions, the expert notes.

Ksenia Kulikova