Credit Bank of Moscow breaks into top five for corporate bond sales in Russia

Credit Bank of Moscow's corporate debt syndication team had a very busy 2018, breaking into the top five in a national ranking of lead sales arrangers.

Last year, Russia's second-largest private bank arranged 24 debt issues with an aggregate nominal value in excess of 200.0bn roubles, putting it in fifth place for corporate debt placements in the Russian Federation, when excluding those for other banks and financial institutions, and earning it the distinction of "Breakthrough of the Year" at the prestigious 2018 Cbonds Awards.

It placed eighth in the overall ranking, which covers all issues.

CBoM's deputy Chairman, Oleg Borunov, hailed last year's strong showing, saying: "In 2018, our bank managed to make a series of landmark transactions for largest state- and privately-owned Russian companies, such as Russian Railways, FGC UES, Federal Passenger Company, Russian Agricultural Bank, Eurasian Development Bank, the State Transport Leasing Company, the Russian Highways State Company and others.

"We are going to become ever more present in the debt capital market."

In total, over the course of last year, 41 lead arrangers placed 489 debt issues with a total nominal value of 1.54trn roubles ($23.2bn).

The lender's performance was all the more noteworthy given the at times challenging macroeconomic backdrop, although some analysts appeared to be cautiously optimistic regarding the outlook for Russian financial assets.

In a research note sent to clients on 21 January, analysts at Bank of America-Merrill Lynch sounded a positive note on the prospects for the rouble and Russian government debt (OFZs).

"Favourable positioning, levels and oil outlook make us bullish on RUB, especially in 1Q19, as the EM environment is likely to remain constructive. Our [year-end] 2019 forecast is 62, and we continue to express a long conviction via our long 10y OFZs position, FX-unhedged (level: 8.35, risk: sanctions)," they said.

They also noted the decline seen in foreign ownership of OFZs, from 34% in April 2018 to 24% at present, representing an outflow of 500bn roubles.

"International participation is at 2016 levels, when Brent was in the 40s. The exodus has been accompanied by a large repricing in rates, which is reversing in 2019, since inflows are resuming. FX positioning also moved lower, after the summer peak," they explained, adding that "light positioning suggest bad sanctions outcome in the price."

They also noted that rouble inflows due to taxes might add a 'bullish' angle.

BofA-ML forecast that those inflows, which were expected during the same week, would hit 700bn roubles.

The investment bank was projecting an average price for Brent crude oil in 2019 of $70 a barrel, with a peak of $74.0 seen in the second quarter.

Analysts at Quoted Data also had a good word to put in for the domestic Russian economy.

Writing on 22 January about the JP Morgan Russian Securities fund, they said: "When QuotedData last wrote on JRS, attention was drawn to Russia's deteriorating relationship with the West and how this had impacted on foreign investors' attitudes towards Russian stocks.

"Since this time, while sentiment has worsened; Russia’s domestically focused economy appears resilient and its companies are generally providing good earnings growth. Valuations and yields are therefore all the more attractive."

As of 1456 GMT, shares of Credit Bank of Moscow were trading up by 0.71% for the day at 5.21 roubles.