ACRA presents the second issue of its Debt Market Bulletin, which describes the current situation and trends in Russia’s fixed income and public debt market.
-
In Q2 2023, bonds was a rather appealing instrument for issuers amid the stabilization of rates and investor interest. On the whole, the second quarter saw the same dynamics as at the start of the year, and in the event of no geopolitical black swans, ACRA assumes that the volume of new placements in H2 will continue to grow, including due to replacement bonds.
-
There is still potential for issuing replacement bonds — ACRA estimates the potential for additional placements at USD 18 bln if the current percentage of replacement of Eurobonds remains.
-
A new tendency in Q2 was issuers deciding in favor of larger placements of digital financial assets (DFAs). More than RUB 15.8 bln of DFAs were placed from April to June.
- ACRA’s ratings cover more than 70% of the debt market in terms of outstanding nominal value. Agency’s ratings cover financial institutions (96% of debt) and supranational development banks (100% of debt) to the most extent.
Current state of the debt market
In Q2 2023, the bond market grew by 2.9% to RUB 40.5 tln. The main growth driver of the corporate bond market was non-financial companies that placed new bonds worth more than RUB 560 bln. From April to June, the growth of coupon rates for new placements in the first and second tiers of issuers practically stopped following a slowdown in the growth of the OFZ yield curve (rates approached the levels of the first quarter of this year). At the same time, coupon rates declined in the third tier due to higher demand among investors for these instruments.
Given the actions of the Russian Ministry of Finance to cover the budget deficit by issuing OFZs, the growth of the corporate bond market in Q2 2023 exceeded growth of public debt (for details on the structure of consolidated public debt, see Appendix 1).
Table 1. Bond market structure by outstanding nominal value, RUB bln

1Including OFZ-PK, OFZ-PD, OFZ-IN, OFZ-AD, OFZ-n, GSO-PPS, GSO-FPS, excluding Eurobonds
2Including State Development Corporation VEB.RF.
3Including DOM.RF, leasing companies, micro-finance companies, PUR RTB, SFO, SOPF, and IA.

4 Credit ratings assigned by one of the four credit rating agencies included in the Bank of Russia’s register were taken into account. If the debt obligation had a credit rating (regardless of whether the issuer had a credit rating and its level), the credit rating of this issue was used. The indicator is calculated for the corporate bond market, as well as for issues of regions and municipalities.
The main volume of bonds in circulation falls on the debt obligations of first-tier issuers (companies with AAA credit ratings under the national scale for the Russian Federation) — more than 50% of the bond market at outstanding nominal value. The share of bonds issued by second-tier issuers is 26%.
New placements in Q2 2023
From April 1, 2023 until June 26, 2023, the volume of placements of new corporate bond issues amounted to around RUB 0.94 tln. Fig. 2 shows that approximately half of these placements were made by first-tier and second-tier non-financial companies.
Figure 2. Industries of new issuers (first-tier and second-tier non-financial companies), RUB bln
Sources: Cbonds, ACRA
Table 2 and Figure 3
provide data on volumes of new corporate bond placements in Q2 2023. The volume of new placements over the analyzed period slightly exceeded the indicator for Q1 (RUB 939 bln and 900 bln, respectively), which was due to investor demand for debt instruments and free liquidity in the market. ACRA does not expect placements to grow significantly in Q3 compared to the levels achieved in April and June. Expectations of the Bank of Russia hiking its key rate, as well as a smaller volume (RUB 271 bln) of planned redemptions in Q3 compared to Q2 and Q4 (RUB 520 bln and 571 bln, respectively) will constrain placements.
Table 2. Placements of corporate bonds in Q2 2023, RUB bln
ISSUER TYPE |
Total |
Tier 1 |
Tier 2 |
Tier 3 |
No rating |
Financial institutions |
171.4 |
123.5 |
47.8 |
— |
— |
Supranational development banks |
18.4 |
18.4 |
— |
— |
— |
Other financial organizations |
185.9 |
71.4 |
30.2 |
26.8 |
57.5 |
Non-financial companies |
563.8 |
305.5 |
153.6 |
22.2 |
82.5 |
Total |
939.5 |
518.9 |
231.6 |
49.1 |
140.0 |
Sources: Cbonds, ACRA
Figure 3. Volumes of new placements in Q4 2022, and Q1 and Q2 2023, RUB tln
Sources: Cbonds, ACRA
Coupons of new placements and yield dynamics by tiers
Investor demand for debt instruments had a favorable impact on the coupon rates for new placements: for example, certain categories of third-tier issuers saw rates decline (Fig. 4).
Figure 4. Comparison of coupon rates for recently issued bonds by issuer creditworthiness*
* Coupon rate for 3-year corporate bonds issued in Q4 2002, Q1 2023, and Q2 2023. The sample only includes market exchange-traded issues, including non-financial companies, banks, and financial institutions.
There was not enough data to calculate the indicator for category B bonds in Q2 2023.
Sources: Cbonds, ACRA
The yields of bonds in the secondary market also declined amid the stabilization of the situation in the debt market in the first and second quarters of this year. Fig. 5 shows that compared to the average values for Q1, yield indices in Q2 declined by 14 bps for first-tier bonds5, 9 bps for second-tier bonds6, and 86 bps for third-tier bonds7, which indicates the presence of investor demand for instruments of this type and a significant increase in interest in third-tier bonds in the absence of a wide variety of investment instruments, primarily for qualified individual investors.
5 CBonds CBI RU Top Market Investable YTM.
6 Cbonds CBI RU Middle Market Investable YTM.
7 Cbonds-CBI RU High Yield YTM.
Figure 5. Difference in yields of issuers

Sources: Cbonds, ACRA
Replacement bonds
As of the end of June 2023, replacement bonds totaling the equivalent of USD 14.3 bln had been placed. At the same time, the volume of replaced Eurobonds is equal to USD 28.33 bln. The placement ratio of replacement bonds generally depends on the composition of securities holders (ratio of residents to non-residents) and currently is about 50% of the original nominal value. Issuers issuing replacement bonds include Gazprom, LUKOIL, MMK, Metalloinvest, and Sovcomflot.
The total volume of Eurobonds of Russian companies in circulation, for which replacement bonds have not yet been issued, stands at around USD 36.5 bln. Thus, at the abovementioned replacement rate, the additional volume could be around USD 18 bln, which would increase the size of the replacement bond market to the equivalent of approximately USD 32 bln.
However, further placements will also depend on the plans of issuers who have the option of refusing to do this by obtaining the appropriate permission.
Credit rating coverage of corporate bonds
Currently, a considerable part of the debt instrument market is covered by ACRA ratings. About 70% of the volume of issues has an issue rating or issuer rating assigned by the Agency, while ACRA’s share in the issues of the banking sector is 96% (RUB 3,432 bln out of RUB 3,581 bln), and in the issues of supranational development institutions it is 100% (Fig. 6).
Figure 6. Coverage of bond market with ACRA’s ratings, RUB bln
Sources: Cbonds, ACRA
Key rate and OFZ yields
On June 9, 2023, the Bank of Russia’s Board of Directors kept the key rate at 7.5% per annum. The Bank of Russia assumes the possibility of raising the rate at the next meetings against the background of the predominance of pro-inflationary risks. In the base case scenario of its macroeconomic forecast, ACRA expects the key rate close to the current 7.5% at the end of 2023.
In Q2 2023, OFZ curve yields continued to grow following a trend observed since the end of 2022. As shown in Fig. 7, growth has strengthened only for the long end of the curve, and the yield of short-term OFZs has not changed much since the end of Q1 2023.
Figure 7. OFZ curve dynamics
Sources: official website of the Bank of Russia, ACRA
Issuers’ credit risks
There were no defaults of new issuers in the Russian bond market in Q2 2023. However, the risks of refinancing previously issued obligations may persist for high-yield companies with weak liquidity and debt coverage metrics (in the conditions of further rate increases during 2023). At the same time, ACRA does not expect mass defaults in the coming months in the absence of new black swans in the market.
The Agency calculates, on a monthly basis, the Rating Action Index for the two largest Russian credit rating agencies, which reflects the dynamics of the agencies’ assessments of their customers’ creditworthiness (Fig. 8). The index has been calculated since the beginning of 2020. Index values show that the trend observed until February 2022 has actually recovered (since the beginning of fall 2022) along with compensatory growth of the index against the trend seen since early 2020. In general, this may indicate rating agencies’ positive assessment of adaptation of the companies in their portfolios to the new macroeconomic reality.
Like in Q1 2023, approximately 85% of public debt is currently covered by credit ratings, while 81–82% of the total volume of outstanding bonds have ratings of A- or higher under the national scale for the Russian Federation, which indicates an expected one-year default probability of less than 1.5%.
Figure 8. Rating Action Index
Sources: ACRA and Expert RA
In Q3 2023, the expected volume of repayment of corporate bonds is about RUB 270 bln. Current rates and interim market stabilization may also be of potential interest to new issuers, despite a possible further increase in the value of risk-free assets. At the same time, in the conditions of the weakening of the ruble, investors’ interest is shifting towards replacement bonds.
DFA market
In the second quarter of this year, there was a trend to move from sandbox placements of short-term trial DFA issues in small volumes, which were bought, as a rule, by issuers themselves, to larger placements of the pioneers of this market.
The volume of DFA issues exceeded RUB 15.8 bln, the largest issuers were:
-
Russian Railways: DFAs issued on the Masterchain platform and bought by VTB Factoring amounted to RUB 15 bln;
-
Rostelecom: DFAs issued on the DFA platform of Alfa-Bank amounted to RUB 750 mln.
By the end of June 2023, the Bank of Russia had included eight entities in the register of information system operators. In mid-June of this year, ACRA published its draft Methodology for Assigning Credit Ratings to Digital Financial Assets
Appendix 1
2019 |
2020 |
2021 |
2022 |
Q1 2023 |
|
Debt of the general government of the Russian Federation |
|||||
TOTAL |
15,103.5 |
20,629.9 |
22,269.4 |
23,759.2 |
24,601.7 |
% of GDP |
13.8% |
19.2% |
16.5% |
15.5% |
16.1% |
USD bln |
244.0 |
279.3 |
299.8 |
337.8 |
319.1 |
guarantees |
1,744.9 |
2,048.9 |
2,170.0 |
2,112.3 |
2,204.0 |
securities |
12,458.5 |
17,677.0 |
19,477.4 |
21,294.2 |
22,096.0 |
other |
900.1 |
904.0 |
622.0 |
352.8 |
301.6 |
guarantees |
11.6% |
9.9% |
9.7% |
8.9% |
9.0% |
securities |
82.5% |
85.7% |
87.5% |
89.6% |
89.8% |
other |
6.0% |
4.4% |
2.8% |
1.5% |
1.2% |
internal debt[1] |
11,670.0 |
16,421.8 |
17,816.6 |
19,709.6 |
20,223.2 |
external debt |
3,433.5 |
4,208.1 |
4,452.8 |
4,049.7 |
4,378.5 |
internal debt |
77.3% |
79.6% |
80.0% |
83.0% |
82.2% |
external debt |
22.7% |
20.4% |
20.0% |
17.0% |
17.8% |
Debt of the federal government |
|||||
TOTAL |
13,567.4 |
18,940.4 |
20,921.9 |
22,819.5 |
23,724.8 |
% of GDP |
12.4% |
17.6% |
15.5% |
14.9% |
15.5% |
USD bln |
219.2 |
256.4 |
281.6 |
324.4 |
307.8 |
guarantees |
1,661.0 |
1,993.4 |
2,126.0 |
2,083.6 |
2,172.2 |
securities |
11,848.7 |
16,882.5 |
18,657.7 |
20,628.5 |
21,434.2 |
other |
57.7 |
64.5 |
138.1 |
107.5 |
118.4 |
guarantees |
12.2% |
10.5% |
10.2% |
9.1% |
9.2% |
securities |
87.3% |
89.1% |
89.2% |
90.4% |
90.3% |
internal debt |
10,171.9 |
14,751.4 |
16,486.4 |
18,781.0 |
19,357.8 |
external debt |
3,395.4 |
4,189.0 |
4,435.4 |
4,038.6 |
4,367.0 |
internal debt |
75.0% |
77.9% |
78.8% |
82.3% |
81.6% |
external debt |
25.0% |
22.1% |
21.2% |
17.7% |
18.4% |
Internal debt |
10,171.9 |
14,751.4 |
16,486.4 |
18,781.0 |
19,357.8 |
guarantees |
840.5 |
695.3 |
726.6 |
701.7 |
708.2 |
securities |
9,331.4 |
14,056.2 |
15,759.9 |
18,079.3 |
18,649.5 |
External debt |
3,395.4 |
4,189.0 |
4,435.4 |
4,038.6 |
4,367.0 |
guarantees |
820.4 |
1,298.2 |
1,399.4 |
1,381.9 |
1,464.0 |
securities |
2,517.3 |
2,826.3 |
2,897.9 |
2,549.2 |
2,784.7 |
other |
57.7 |
64.5 |
138.1 |
107.5 |
118.4 |
Debt of administrative subjects |
2,113.0 |
2,496.0 |
2,474.4 |
2,788.7 |
2,966.1 |
% of GDP |
1.9% |
2.3% |
1.8% |
1.8% |
1.9% |
USD bln |
34.1 |
33.8 |
33.3 |
39.6 |
38.5 |
guarantees |
55.4 |
48.4 |
39.3 |
24.9 |
27.5 |
securities |
588.5 |
769.9 |
799.9 |
651.8 |
648.0 |
bank loans |
575.8 |
568.1 |
257.6 |
126.2 |
78.0 |
budget loans |
886.2 |
1,102.9 |
1,371.5 |
1,979.9 |
2,206.7 |
other |
7.1 |
6.7 |
6.3 |
5.9 |
5.9 |
Internal debt |
2,086.9 |
2,468.4 |
2,449.0 |
2,769.9 |
2,946.9 |
guarantees |
45.7 |
36.3 |
28.4 |
19.8 |
21.9 |
securities |
588.5 |
769.9 |
799.9 |
651.8 |
648.0 |
bank loans |
575.8 |
568.1 |
257.6 |
126.2 |
78.0 |
budget loans |
876.8 |
1,094.1 |
1,363.2 |
1,972.1 |
2,198.9 |
other |
0.1 |
0.1 |
0.0 |
0.0 |
0.0 |
External debt |
26.1 |
27.6 |
25.4 |
18.8 |
19.2 |
guarantees |
9.7 |
12.12 |
10.88 |
5.13 |
5.58 |
securities |
- |
- |
- |
- |
- |
bank loans |
- |
- |
- |
- |
- |
budget loans |
9.4 |
8.79 |
8.30 |
7.78 |
7.78 |
other |
7.0 |
6.6 |
6.2 |
5.9 |
5.9 |
Debt of municipalities |
401.4 |
387.6 |
377.0 |
374.6 |
384.7 |
% of GDP |
0.4% |
0.4% |
0.3% |
0.2% |
0.3% |
USD bln |
6.5 |
5.2 |
5.1 |
5.3 |
5.0 |
guarantees |
28.6 |
7.1 |
4.7 |
3.8 |
4.3 |
securities |
21.3 |
24.7 |
19.9 |
13.9 |
13.9 |
bank loans |
259.5 |
264.7 |
220.0 |
113.3 |
99.3 |
budget loans |
92.1 |
91.2 |
132.4 |
243.6 |
267.1 |
other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Internal debt |
380.1 |
387.2 |
376.8 |
374.5 |
384.6 |
guarantees |
7.3 |
6.7 |
4.5 |
3.7 |
4.2 |
securities |
21.3 |
24.7 |
19.9 |
13.9 |
13.9 |
bank loans |
259.5 |
264.7 |
220.0 |
113.3 |
99.3 |
budget loans |
92.1 |
91.2 |
132.4 |
243.6 |
267.1 |
other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
External debt |
21.3 |
0.4 |
0.2 |
0.1 |
0.1 |
guarantees |
21.3 |
0.350 |
0.232 |
0.126 |
0.093 |
securities |
- |
- |
- |
- |
- |
bank loans |
- |
- |
- |
- |
- |
budget loans |
- |
- |
- |
- |
- |
other |
- |
- |
- |
- |
- |
Federal government’s debt in securities |
|
|
|
||
TOTAL |
11,848.7 |
16,882.5 |
18,657.7 |
20,628.5 |
21,434.2 |
in national currency |
9,331.4 |
14,056.2 |
15,759.9 |
18,079.3 |
18,649.5 |
in foreign currency |
2,517.3 |
2,826.3 |
2,897.9 |
2,549.2 |
2,784.7 |
in national currency |
78.8% |
83.3% |
84.5% |
87.6% |
87.0% |
in foreign currency |
21.2% |
16.7% |
15.5% |
12.4% |
13.0% |
Federal government’s internal debt in securities |
|||||
Breakdown by type of security |
9,331.4 |
14,056.2 |
15,759.9 |
18,079.3 |
18,649.5 |
OFZ |
8,969.1 |
13,708.9 |
15,533.5 |
17,904.9 |
18,475.1 |
OFZ-PD (fixed coupon) |
6,474.7 |
8,102.2 |
9,812.7 |
9,794.8 |
10,276.7 |
OFZ-AD (amortized) |
345.0 |
282.6 |
209.3 |
166.0 |
136.5 |
OFZ-PK (floating coupon) |
1,713.9 |
4,709.3 |
4,709.3 |
6,896.9 |
6,896.9 |
OFZ-IN (inflation protected) |
371.2 |
574.8 |
763.1 |
1,025.1 |
1,146.1 |
OFZn (for population) |
64.2 |
39.9 |
39.2 |
22.2 |
19.0 |
GSO |
362.3 |
347.3 |
226.4 |
174.4 |
174.4 |
RUB/USD exchange rate, end of period |
61.91 |
73.88 |
74.29 |
70.34 |
77.09 |
GDP, RUB bln |
109,608 |
107,658 |
135,295 |
153,435 |
153,036 |
Appendix 2
Figure 9. Volume of outstanding bonds9 (non-repaid par value) by rating, RUB bln

9Credit ratings assigned by one of the four credit rating agencies included in the Bank of Russia’s register were taken into account. If the debt obligation had a credit rating (regardless of whether the issuer had a credit rating and its level), the credit rating of this issue was used. The indicator is calculated for the corporate bond market, as well as for issues of regions and municipalities.
Figure 10. Number of issuers by rating

Sources: Cbonds, ACRA