Corporate bond defaults

• Bonds

2022: Number of corporate defaults in Russia doubles

The number of defaults on corporate bonds in Russia in 2022 doubled: 15 companies were unable to fulfill obligations on 31 bond issues against 7 and 11, respectively, in 2021. This is evidenced by the calculations of the Expert RA agency, made on the basis of Cbonds data. Vedomosti publishes statistics on January 9, 2023.

Basically, defaults are allowed by corporate borrowers with a rating below ruBB and without a rating, says Mikhail Nikonov, junior director of corporate ratings at Expert RA. This is due to the fact that in difficult macroeconomic conditions, regions issuing municipal bonds can count on government support - receiving advanced subsidies or increasing the term for returning treasury budget loans. Corporate borrowers with a low rating cannot qualify for this, respectively, and the risk of default for them is higher, Nikonov explains.

The number of defaults on corporate bonds in Russia in 2022 doubled

Maxim Chernega, head of the DCM department of corporate finance at the Broker's Figure, noted that the situation in 2022 sharply complicated the refinancing of bond debt, especially market participants from the second and third echelon.

The largest default in 2022 was made by the OR Group (formerly Obuv Rossii): in January it did not pay for the issue of BO-07 bonds worth more than 592 million rubles. The last default was made by her on December 28 - the company failed to pay 159.95 million rubles. Also failed to cope with the obligations of Invest-Development, which on April 21, 2022 defaulted on the repayment of face value by 68.56 million rubles.

According to forecasts of Expert RA, in 2023 another 20-25 companies will declare a default. This assumption is associated with a significant deterioration in the situation in many low-rating and non-rating issuers amid the crisis of 2022.^[1]

Notes