Market tension interferes with bond placements by Russian banks - analysts
MOSCOW. July 25. (Interfax) - Two large Russian banks announced on Tuesday and Wednesday that they would be postponing their ruble-denominated bond placements, which experts polled by Interfax believe may have stemmed from a reduction in investor appetite due to the tense situation on global markets.
On Tuesday evening, Promsvyazbank said that it is delaying book building for its 14th bond series worth 3 billion rubles by two weeks, until August 7. Then, on Monday morning, Renaissance Capital (operates under the brand Renaissance Credit) announced that it is indefinitely postponing its placement of 4 billion rubles in BO-02 exchange bonds "in connection with the unfavorable market situation."
Troika Dialog analyst Sergei Goncharov believes that the deferment of these placements might be associated with the tense market situation. "There was a moment when several market placements occurred - for example, Gazprombank and TCS Bank. However, as a whole, the situation on the global market remains volatile. There were major sales at the beginning of the week. Right now investors are worried, and nobody particularly wants to buy securities. Therefore, it is totally reasonable that borrowers can't find enough demand for their securities and are putting off placements," he said.
There was not a full-fledged opening of the debt market as such in the summer, and those small opportunities taken advantage of by certain borrowers have shut down indefinitely, the expert said.
"The general situation with liquidity in the banking sector is not very good. In order to have solid demand, issuers have to offer significant premiums to the market. However, they aren't yet ready for that, and one can thus expect somewhat of a lull on the primary market. This could last a week, it could last longer," Goncharov said.
The "condition [of the debt market] is rather weak" at the moment, Uralsib Capital analyst Dmitry Dudkin said. "Because of the fact that the situation with liquidity is pretty complicated, it's of course hard to find a buyer on the ruble market when the foreign situation is aggravated," he said.
Complications with placements on the Russian debt market have been ongoing for almost a year now. Banks have to refinance, which is why companies and banks will try to enter that market in the future, albeit with "short-term" instruments, the expert believes. Right now securities can be placed with major premiums, but not everyone is ready to do that. Fears of a financial catastrophe are indeed influencing the market, although "by September there should probably be some sort of activation," Dudkin said.
VTB Capital analyst Maxim Korovin said that the "window" for placements on the debt market might open or close depending on the global appetite for risk. "The appetite for risk has declined a bit. I can't say that this is a certain trend in which we'll stay for several months or weeks. In fact, I can say that right now there has been a bit of a slow-down in order to better understand supply and demand," he said.
The primary market has been rather sluggish as of late. "I can't say that we have started up, the engine started working and suddenly stopped again," Korovin said.