Debt Market Bulletin

Issue VII: results of H1 2025

ACRA presents the seventh issue of its Debt Market Bulletin, which describes the current situation and trends in Russia’s fixed income and public debt market.

• As of July 1, 2025, the total volume of the Russian bond market by outstanding nominal value amounted to RUB 56.2 tln, which is 5.8% higher than the figure at the start of the year. The main driver of growth was the government bond segment, which added 8.8% from January to June. The corporate bond segment grew by only 3.5%, even amid significantly increased volumes of new corporate bond issuances (+56% vs. new issuances for H1 2024), which is due to growth of redemptions as well as the revaluation of foreign currency-denominated bonds on the back of a stronger ruble exchange rate.

• ACRA does not expect a significant change of dynamics in the corporate bond market in the second half of the year, taking into account the forthcoming redemptions, current liquidity deficit in the banking sector, and the plans of the Russian Ministry of Finance for new borrowings. At the same time, the Agency assumes that a gradual softening of monetary policy may facilitate an acceleration in the rate of increase in corporate debt in the medium term.

• After the peak of the key rate in the fourth quarter of last year, yields in all corporate bond tiers gradually decreased during the H1 2025, but there were no significant changes in the spreads of average yields between tiers. ACRA expects that these spreads will be narrower during second half of the year in the context of further easing of monetary policy.

• Since the beginning of the year, there has been an increase in the volume of unfulfilled obligations of corporate bonds. At the same time, the total amount of outstanding bonds of issuers in the high-risk segment that defaulted in the period from January to June amounted to less than 0.5% of the total volume of third-tier corporate bonds and unrated bonds. In the context of the entire debt market, the default rate remains low.

• Even in the worst-case scenario, according to which the high cost of debt financing for corporate borrowers will remain high for the next two years, the Agency does not expect a significant deterioration of ability of non-financial companies to attract the necessary refinancing, and therefore does not see the risk of a significant increase in the number of defaults in the bond market (for more details, see ACRA’s analytical commentary The safety margin of Russian non-financial companies in a high-rate environment dated March 13, 2025).

Current state of the debt market

As of July 1, 2025, the total volume of the Russian bond market in nominal terms amounted to around RUB 58 tln, and RUB 56.2 tln in terms of outstanding nominal value, which is RUB 3.1 tln (5.8%) higher than the indicator recorded at the beginning of the year. ACRA notes that as of the end of the first half of the year, the growth rate of the total volume of the bond market turned out to be higher than in H1 2024 (when growth was about 4.5%), despite a significant increase in interest rates. The main driver of growth in the period from January to June was the government bond segment, which increased by RUB 2.1 tln (8.8%). In the corporate bond segment, the increase was RUB 1 tln (3.5%).

The growth of the size of the ruble-denominated government bond market was driven by new issues of OFZs (federal loan bonds). Over the first six months of the year, the Russian Ministry of Finance placed OFZs to a total of around RUB 2.9 tln, thereby exceeding the quarterly borrowing plans. In the aforementioned period, only bonds with fixed coupons (OFZ-PD) were placed, primarily with long redemption periods (more than 10 years), which could have additionally supported demand from market participants amid a strengthening of expectations regarding the end of the key rate hiking cycle. The planned volume of OFZ placements is RUB 1.5 tln in the third quarter, which exceeds placement plans for the previous two quarters.

In the corporate bond segment, non-financial companies were the most active in increasing their debt in the first half of the year (Table 1) — since the beginning of the year they have increased the total volume of borrowings (at the outstanding nominal value) by RUB 1.4 tln, or 7.6%. At the same time, the volumes of debt on bonds of credit institutions and other financial institutions decreased (by 6.5% and 5.7%, respectively).

Table 1. Bond market structure by outstanding nominal value, RUB bln

¹ Including OFZ-PK, OFZ-PD, OFZ-IN, OFZ-AD, OFZ-n, GSO-PPS, GSO-FPS, excluding Eurobonds
² Including State Corporation “VEB.RF” and JSC “DOM.RF”
³ Including leasing companies, mortgage agents and specialized financial companies
Sources: Russian Ministry of Finance, Cbonds, ACRA

The total volume of corporate bond debt at outstanding nominal value by the end of H1 2025 amounted to RUB 30.6 tln, having grown by 3.5% since the start of the year (vs. growth of 6% in H1 2024). Despite the significantly increased volume of new corporate bond placements during the specified period (by 56%), the growth of the corporate debt market in terms of outstanding nominal value in ruble equivalent was not so significant, which is due to the redemptions that took place and the revaluation of foreign currency bonds against the backdrop of the strengthening ruble exchange rate. Given the upcoming redemptions, continued liquidity deficit in the banking sector and the Ministry of Finance’s plans to make new issues of government bonds by the end of the year (including the recent increase of the volumes of planned OFZ placements in Q3), ACRA does not expect significant changes to the dynamics of the corporate bond market in the second half of the year. At the same time, a possible increase in demand for bonds of Russian companies from private investors, given the accelerated decline in yields on low-risk assets (including bank deposits and short-term OFZs) in the context of further easing of monetary policy, could contribute to an acceleration in the growth rate of corporate bond debt in the medium term.

The volume of placements of new issues of corporate bonds in H1 amounted to around RUB 4.6 tln, while the share of bond issues denominated in foreign currencies declined to 19% (vs. 32% in H1 2024), despite the high rates for ruble borrowings. This decline in the share of foreign currency issues was related not only to the suspension of exchange trading of dollars and euros on the Moscow Exchange and the official end of the process of replacing corporate Eurobonds in June 2024, but also due to the low activity of companies in the oil and gas industry (which traditionally place large bonds in foreign currency) in the debt market since the start of the year.

ACRA also notes a significant decline in the share of financial institutions in the structure of new placements — from 40% in H1 2024 to 17% in H1 2025 (Fig. 1). Non-ferrous metallurgy companies accounted for 16% of new placements (4% in H1 2024), development institutions and government agencies accounted for 9% (1% in H1 2024), and railway transport accounted for 7% (vs. 3% in H1 2024).

Figure 1. Industries of new issuers in H1 2025

Sources: Cbonds, ACRA

As of July 1, 2025, the lion’s share of bonds in circulation (continued to be debt obligations of first-tier issuers (bonds with the highest credit rating of AAA on the national scale for the Russian Federation) — 56% of the bond market by outstanding nominal value. Second-tier bonds accounted for almost 23% of the market, and high-risk issuers took a share of about 2%. Bonds of mortgage agent (which do not have credit ratings) accounted for 6% of the market, while the share of other companies without credit ratings was 14%. Thus, the total share of issuers without credit ratings was about 20% of the corporate debt market volume. At the same time, in quantitative terms, issuers without ratings (excluding mortgage agents) and third-tier issuers accounted for 71% of all borrowers, which indicates significantly more modest issue volumes on the part of these market participants. The structure of the corporate debt market in terms of credit risk levels as of the beginning and end of H1 2025 is presented in Fig. 2–3.

⁴ Credit ratings assigned by one of the four credit rating agencies registered by the Bank of Russia
⁵ Mortgage agents without credit ratings
Sources: Cbonds, ACRA

The total volume of new corporate bond issues in the first six months of 2025 (RUB 4.6 tln) was 56% higher than in the same period last year. The main increase in new placements was formed by bonds issued by first-tier issuers: the total volume of new issues in this segment almost doubled compared to the figure for H1 2024 and amounted to about RUB 3 tln (Fig. 4). In second-tier bonds, there was also an increase in the total volume of issues (by 25%). ACRA notes that the pronounced positive dynamics of bond placements by issuers with high credit ratings was due to a number of factors, the most important of which are outlined below.

First, the refinancing of credit obligations using bond issues against the background of the higher costs of new bank loans, given the relatively low spreads for issuers with high ratings in the debt market. Second, the need of a number of large companies to attract additional funding for large-scale investment programs, including taking into account projects originally planned for 2023–2024, the implementation of which was postponed during the period of the Bank of Russia’s key rate hike. The total volume of new bond issues by issuers in the high-risk segment and issuers without credit ratings remained almost unchanged for H1 2025 compared to the figure for H1 2024 (with the exception of the mortgage agent bond segment, where a 32% decrease was noted) against the background of a higher key rate and increased spreads relative to yields on low-risk assets. The difference between the average coupon yield of bonds issued by issuers with the highest credit rating and the yield of bonds issued by issuers with AA ratings in the first half of 2025 was small at around 0.3 pps (Fig. 5). Such a small difference is due to the fact that in the structure of bond issues with AA ratings, a significant share fell on companies with state participation and a high level of state support (including Aeroflot, GTLK, GPB Finance), whose risks of default are assessed by the market as very low. At the same time, in the segment of issuers with AAA ratings, bonds were mainly issued by private companies.

⁶ Weighted average coupon rate for 3-year RUB-denominated corporate bonds issued in the analyzed period. The sample only includes market exchange-traded issues, including non-financial companies, banks, and other financial institutions.
Sources: Cbonds, ACRA

After the peak of the key rate hike observed in Q4 2024 passed, yields across all corporate bond levels have been gradually declining since the beginning of this year (Fig. 6), but taking into account the tight monetary policy, the average yields did not change significantly in the first half of the year. The yield index for the first⁷ tier decreased by 66 bps relative to the average values of H2 2024 (from 22.65 in H2 2024 to 21.99 in H1 2025), the yield index for the second⁸ tier increased by 71 bps (from 26.72 to 27.42), and for the third⁹ tier it increased by 339 bps (from 29.69 to 33.08). At the same time, there was no significant change in the average yield spreads between the tiers, with the exception of some short-term surges in yields in the high-yield bond segment (including against the background of the decisions of the Board of Directors of the Bank of Russia on the key rate). ACRA expects yield spreads between bonds of issuers of different tiers to gradually shrink that in the second half of the year if monetary policy easing continues.

⁷ The Cbonds CBI RU Top Market Investable YTM was used to determine tier 1 yields.
⁸ The Cbonds CBI RU Middle Market Investable YTM was used to determine tier 2 yields.
⁹ The Cbonds-CBI RU High Yield ((B- to BBB)) YTM was used to determine tier 3 yields.

^* Respective average YTM Index for H2 2024.
^** Respective average YTM Index for H1 2025.
Sources: Cbonds, ACRA

By the end of H1 2025, government bond yields had significantly decreased in all sections of the OFZ curve (Fig. 7), which was facilitated by the Bank of Russia’s reduction of the key rate by 1 pp in June (the first rate cut since the beginning of the period of monetary policy tightening in July 2023). The inverted slope of the G-curve and the widening of the negative spread between the key rate and the government debt curve indicate that market participants are highly likely to expect a consistent reduction in the key rate by the end of this year. In addition, the likely easing of monetary policy in the medium term is indirectly indicated by factors such as a slowdown in inflationary dynamics, a significant strengthening of the ruble exchange rate, and a decrease in the growth rate of the ruble money supply.

Credit risk of issuers

In H1 2025, the Russian corporate debt market saw defaults on bonds issued by FPC Garant-Invest, Kuzina LLC, Russian Container Company JSC, Seller LLC, Financial Systems NAO, Naftatrans Plus LLC, TK Magnum Oil LLC. FPC Garant-Invest defaulted on an option, after which it announced the default on all outstanding bonds and its upcoming restructuring. The volume of FPC Garant-Invest’s bonds in circulation was about RUB 15 bln, which significantly exceeds the figures of other defaulted issuers. It should be noted that all companies who defaulted of their bonds in H1 2025 were third-tier issuers (rated BBB or lower by one of the four credit rating agencies authorized by the Bank of Russia) or did not have credit ratings. The total volume of corporate bonds issued by companies that defaulted in H1 2025, amounted to less than 0.5% of the total volume of third-tier corporate bonds and unrated bonds in circulation.

ACRA notes that in the context of high interest rates, bond refinancing risks remain generally elevated for companies with low liquidity and debt coverage metrics. On the other hand, the overall default rate remains very low (less than 0.1% of the total outstanding nominal value of corporate bonds at the beginning of last year), which indicates a limited impact of rising interest rates on the financial stability of issuers during the last reporting periods. To determine the degree of deterioration of the situation with the debt burden of Russian companies in the context of the prolonged period of high interest rates, non-financial companies included in ACRA’s rating portfolio were analyzed for their distribution by leverage levels and coverage indicators. Fig. 8 shows the current profile of the debt burden of the companies included in the Agency’s analytical sample. The ratio of total (net) debt to FFO before net interest was used as a debt burden indicator. This indicator, used by ACRA in the analysis of non-financial companies, reflects the coverage of debt by operating cash flow before the movement of working capital and interest payments. 

¹⁰ Border values of leverage used to assessments are: very low —1 or lower; low —1 to 2 inclusive; medium —2 to 3.5 inclusive; above medium —3.5 to 5 inclusive; high — over 5.
Source: ACRA

To calculate interest coverage indicators, the Agency used available information on changes in the volume of companies’ net debt in 2025 and planned changes in FFO (companies’ plans and their ability to include an additional interest burden in the cost of their products or services, as well as ACRA’s analytical assumptions, taking into account the development factors in relevant industries).

The dynamics of the median indicator, the ratio of FFO before net interest payments to interest payments, is shown in Fig. 9 (the indicators for the sample for 2023–2025 were analyzed by tier).

Figure 9. Companies’ median interest coverage by tier

Source: ACRA

If, despite the beginning of monetary policy easing, high interest rates persist over the next two years, and earlier fixed-income issues are gradually replaced by new bonds are issued at current increased rates, the creditworthiness of companies may tend to worsen. At the same time, by the end of the year, ACRA does not expect a significant reduction in the ability of non-financial companies to raise funds needed for debt refinancing (through credit lines and via the bond market), and therefore the Agency does not see a risk of a significant increase in the number of defaults on the bond market relative to last year’s level. A more detailed analysis of the creditworthiness of corporate issuers is presented in ACRA’s analytical commentary The Safety Margin of Russian Non-Financial Companies in a High-Rate Environment from March 13, 2025.