Interest in Russian bond market to grow in time, including on part of SMEs - Chebeskov

MOSCOW. Oct 19 (Interfax) - Interest in the Russian bond market will grow with time, including on the part of small and medium businesses, while the role of banks as a source of attracting investment should gradually decline, said Ivan Chebeskov, director of the Financial Policy Department of the Russian Finance Ministry.

"There is no doubt that the bond market will grow. All the preconditions for this are there: firstly, foreign investors have left, some of them have left; secondly, we do not have the possibility to raise loans in the form of bonds and some tools of foreign financing, such as intragroup loans from abroad, it was quite a standard tool of financing not only foreign subsidiaries, but also Russian companies. In this regard, there will be a huge demand for new money, because we need to develop the companies that we have and the companies that foreigners left behind," he said, speaking at a conference titled "The Future of the Bond Market: Return to Growth".

Of course, banks will remain a key source of financing and attracting investment, but their role will gradually decline "in some time, he said. "We have all come to the understanding that the capital market and the stock market is the most efficient way to distribute capital and money in the economy and one that is less costly. So I think the role of the stock market and specifically the bond market will grow over the years. Based on the situation we are in, there is simply no way around it, this market will grow, and there will be a huge demand for bond loans not only from large businesses, but also from smaller businesses. This creates huge opportunities for participants in this market, too," Chebeskov said.

A number of changes will be needed to develop this market. "First of all, this is the increase and availability of various bond instruments that meet the needs of investors. Many investors want not only returns, many want to be involved in the projects where they are investors, want to feel that they are investing with responsibility, social and environmental responsibility. Therefore, I think this vector will develop, ESG is the vector, the vector of investors' involvement in their investments, these are not necessarily "green" bonds, these may well be infrastructure bonds. There will be more and more demand," the Ministry official said.

Furthermore, he said, access for friendly foreign investors to the Russian stock market must be simplified. "At the moment, it is difficult for a foreign investor to participate in our market. One of the problems is the identification of the investor, there is a problem related to taxes. It is necessary to promote and solve these issues. We need to facilitate access to our market for them," Chebeskov said.

Apart from that, it is necessary to address the issue of access to information. "I think that we and market participants have found a consensus regarding the need to find options for information disclosure, primarily information about issuers, important macroeconomic information that investors need to decide whether or not to invest in certain assets. Information was closed based on sanctions risks, but I think we will find a balance between the risks and the importance of disclosure to investors," he said, also noting the increased role of the rating industry.

"The role of credit rating agencies has increased now that there is less information. Their role is very important," Chebeskov said.