Analytical commentary

The debt market is returning to pre-crisis levels after a period of stress in early 2022

The geopolitical events of early 2022, the Bank of Russia’s decision to increase the key rate to 20% in later February, and the suspension of stock exchange trading were all factors that lead to a significant decline in the number of new placements in the Russian debt market. From March to May, the lion’s share of new placements were club deals and one-off transactions made by first-tier issuers, while the total volume of new placements declined by more than six times compared to the same period in 2021.

The gradual reduction of the key rate that followed, to lower than 10%, and the restart of trading encouraged issuers to return to the debt market and boosted its liquidity. First-tier issuers and a number of second-tier companies resumed placements, including newcomers to the debt market. A new trend has emerged — offering yuan-denominated bonds, and RUSAL and Polyus are part of this. If the situation continues to stabilize and private investors return to the market, placements by third-tier issuers may also be possible.

From June to August this year, more than RUB 700 bln worth of bonds were placed in the Russian market. This is approximately two-thirds of the size of new placements in the same period in 2021. Given the low volume of financing raised in H1 2022, the key rate falling from 20% to 7.5%, as well as companies’ (primarily in the non-financial sector) needs to refinance redeemable instruments, ACRA expects no more than RUB 500 bln of bond placements to take place over the remaining months of 2022.

The total size of new placements in 2022 will not exceed 40% of placements made in 2021. This is due to the following constraining factors:

—        Proximity to the end of the process of reducing the key rate on the short-term horizon: the current rate of 7.5% is close to ACRA’s latest forecast for the end of 2022, as well the Bank of Russia’s medium-term forecast of the average rate for 2023 (6.5–8.5%);

—        Non-financial companies cutting back on their investment programs amid continued uncertainty, as well as banks significantly reducing their debt market operations.

Rating coverage — current trends and growth of ACRA’s market share

The overwhelming majority of issuers who placed bonds in summer 2022 had credit ratings assigned to themselves or their bond issues. The share of issuers that offered bonds without credit ratings declined year-on-year (Fig. 1).

Figure 1. Dynamics of the decline in the number of issuers and the volume of bond issues that did not have credit ratings at the time of placement

Sources: ACRA, Cbonds1

1In this analytical commentary, ACRA’s calculations performed using Cbonds data (excluding OFZs, Bank of Russia bonds, and bonds in circulation for less than a month) were used to construct the figures.

In June–August 2022, the number of issuers who were rated by ACRA and placed new issues grew compared to the same period in 2021 (Fig. 2–3).

Notable is a trend when issuers obtain credit ratings from not just a single rating agency but the two largest agencies in the industry, ACRA and Expert RA (Fig. 4).

Figure 4. Share of issued bonds rated by the largest credit rating agencies

Sources: ACRA, Cbonds 

Since the beginning of the year, 15 defaults (excluding technical defaults) have taken place, mainly in the high-yield bond sector. Note that six issuers defaulted for the first time. Over the past period of 2022, the number of defaulted obligations has declined, as well as their volume, which amounted to RUB 11 bln (RUB 131 bln in 2021). However, in the future, the number of defaults may increase, given the delayed negative effects of the current turbulence.

Figure 5. Number of defaults among rated/non-rated issuers since 2022

Sources: Cbonds, ACRA (excluding technical defaults)

Note that those issuers who defaulted since the beginning of 2022 did not have credit ratings from ACRA.


—        After the minimums seen in spring 2022, the Russian debt market has been recovering gradually, but the volume of new issues this year will still be lower than the maximums of recent years.

—        When issuing debt obligations, issuers have demonstrated wider use of credit ratings, and so there is growing demand for ratings assigned by the largest credit rating agencies.

—        The absence of defaults among ACRA-rated issuers in 2022 indicates the reliability of this instrument for investors who need to assess the credit quality of issuers and their financial obligations.

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Alexey Mukhin
Managing Director
+7 (495) 139 04 80, ext. 101
Svetlana Panicheva
Head of External Communications
+7 (495) 139 04 80, ext. 169
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