Creditors Secure Loan Obligations
2025 Q1: A Staggering Success for Russian Debt Market Players
Hailing a triumphant start to the year, Russian debt market players have pulled off an impressive string of placements in Q1 2025. With a whopping 1.35 trillion rubles worth of market placacements (excluding their own), the figure is more than double the outcome of Q1 2024. According to Cbonds, the top five organizers, spearheaded by Gazprombank, account for over 76% of the entire market. The anticipation is high for these soaring levels of investment activity to persist in the coming quarters, given the mounting need for debt refinancing among issuers.
The league table has undergone some significant shuffling. Gazprombank holds onto its top spot in Q1 2025 with a massive volume of 292.4 billion rubles in corporate bond placements (excluding its own issues). Notably, Alfa Bank takes second place, securing a result of 217 billion rubles, stepping up from its fifth-place position a year ago. "VTB Capital Trading" ascends from fourth to third, nearly touching the 200 billion ruble mark.
A noticeable trend in the market is the growing concentration of market share in the hands of the biggest players. By the end of the reporting period, the top 5 companies are responsible for more than 76% of the total capital raised by issuers on the debt market, representing an increase of 22.5 percentage points from the same period in 2024. Alexander Ermaka, chief analyst of the debt markets at BK "Region", observes that around 52.1% of the total volume can be attributed to 20 large deals exceeding 30 billion rubles.
Foreign currency bond placements have seen a surge since the beginning of the year, with real-sector companies dominating the scene. Artem Starikov, head of debt capital management at Alfa Bank, explains that only a handful of banks can provide underwriting for foreign currency placements. According to estimates, the leading organizers participate in two-thirds of all deals that took place in the first quarter, accounting for a total volume of over $1.8 billion (equivalent).
Despite the surge in placements, bankers are not forecasting a proportional increase in remuneration. Robert Smakeev, head of the capital markets department at Sovcombank, notes that remuneration often depends on market volatility, deal complexity, competition among banks, issuer credit quality, and the volume of required work. The average commission for bond placement organization ranges from 0.5% to 1%, excluding success fees.
On the topic of unexpectedly high corporate bond issuance volumes in March, there's no hard evidence supporting the assertion. However, data trends suggest the following contextual factors:
- Current market dynamics – the reduced outstanding amount of Gazprom's perpetual bond might be a sign of potential refinancing activities rather than new issuance growth.
- Institutions in Europe showing strong demand, as demonstrated by EBRD's Q1 2025 bond activities.
- Sector-specific challenges, such as credit constraints in Europe's real estate market and commodity-linked financing needs.
As we move ahead into Q2 2025 and beyond, considerations influencing the outlook for the Russian corporate bond market include geopolitical pressures, refinancing requirements, commodity price volatility, and alternative funding competition. Potential sanctions compliance and currency controls will likely remain primary constraints for Russian issuers, while maturities of existing debt could drive placement volumes. Meanwhile, the energy sector's performance may dictate creditworthiness assessments, and joint-venture and deconsolidation strategies could reduce bond dependency.
- Gazprombank, the leading organizer in Q1 2025, made a staggering 292.4 billion rubles in corporate bond placements.
- In the first quarter of 2025, foreign currency bond placements witnessed a significant surge, with real-sector companies playing a dominant role.
- Among the top 5 companies in the debt market, Gazprombank alone accounts for over 76% of the total capital raised in Q1 2025.
- Investors are keeping a close eye on the energy sector's performance, as it may dictate creditworthiness assessments in the coming quarters.
