With an eye on the Central Bank – Newspaper Kommersant No. 21 (7466) of 02/06/2023

After a surge in activity in the Russian debt market in December 2022, issuers significantly reduced their activity in January. They raised less than 30 billion rubles on the domestic market, two thirds of which came from the placement of one issuer. However, in February, experts expect an increase in the activity of corporate borrowers, which may be facilitated by the clarification of the Central Bank’s monetary policy at the first meeting of the Board of Directors on the key rate this year.

According to the Cbonds agency, after a bright end to 2022 (see Kommersant on January 11), corporate borrowers significantly reduced activity in the public debt market in January of the new year. During the month, they conducted less than four dozen placements on the domestic market for a total amount of just over 28 billion rubles. This result is 35 times less than in December (985 billion rubles, excluding placements in yuan and replacement bonds), but 1.7 times higher than in January 2022.

However, even the result obtained was largely due to one issuer – Dom.RF Bank placed bonds in the amount of 20 billion rubles. “In January, six issues of high-yield bonds were placed for a total of 1.86 billion rubles, as well as three issues of investment bonds of Sberbank and VTB,” said Alexander Yermak, chief debt markets analyst at BC Region. In addition, according to him, 16 issues of structural bonds worth 3.75 billion rubles were placed on the over-the-counter market.

January is traditionally not the best period of time for the debt market, as the fourth part of the month falls on official holidays and weekends. “Along with the extended New Year holidays, the behavior of issuers is affected by the extremely high activity in December last year, when many companies realized their entry into the market without waiting for the opening of the new working season,” Mr. Yermak notes.

In addition, Dmitry Monastyrshin, chief analyst at PSB, notes that the need for refinancing old debts and new investments in January is traditionally small. “Issuers have a whole year ahead of them to implement their investment plans. Companies are in no hurry to borrow in advance,” the expert notes.

Compared to December, market conditions did not undergo noticeable changes, rates remained approximately at the same levels. In January, OFZ yields with a circulation period of two to three years amounted to 8.2–8.6% per annum against 8.4–8.8% per annum at the end of December. At the same time, the volume of placements in the primary market, according to Tatyana Ambrozhevich, senior vice president of the office of debt capital markets of Rosbank, was influenced by the uncertainty of analysts regarding the forecasts for the dynamics of the key rate of the Bank of Russia. “An atypical situation has developed on the market: there is no consensus on forecasts regarding the further direction of the movement of rates, they are literally opposite,” notes Ms. Ambrozhevich. In such circumstances, issuers traditionally try to wait for greater certainty in the behavior of the financial regulator.

In February, market participants expect activation of primary placements of corporate borrowers. This is due to a large number of working days and a general increase in business activity, Dmitry Monastyrshin believes. In early February, bonds of RusHydro and Segezha were placed in the amount of 41 billion rubles. According to Rusbonds, the nearest plans include placement with Magnit, Sberbank, Gazprom, RSHB, Rostelecom, Dom.RF for at least 140 billion rubles.

According to Alexander Yermak, the activity of corporate issuers will increase from the second ten days of February after the pivotal meeting of the Bank of Russia (February 10), which, in addition to making a decision on the key rate, should update its macroeconomic forecasts. Most analysts expect that following this meeting, the Central Bank will keep the rate at 7.5%, but may tighten signals regarding its further movement. In their opinion, hints of a possible rate hike in the foreseeable future may push issuers to more actively attract funding at current rates.

Vitaly Gaidaev