Corporate Bonds Mostly Under Pressure

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Below is a list of corporate bonds traded on the Moscow Exchange:

- RSXB (ISIN code: RU000A1068R1) -0.1%;

- Polyus (ISIN code: RU000A108L81) -0.8%;

- Borets Capital (ISIN code: RU000A105ZX2) +0.1%;

- AFK Sistema (ISIN code: RU000A101XN7) -0.3%.

All corporate bonds have a credit rating, which helps investors quickly assess the creditworthiness of the issuer.

In Russia, a national rating scale is used. The highest rating is "AAA", the lowest is "C", and there is also a "D" category, which indicates an actual default. The higher the rating, the more reliable the issuer and, generally, the lower the yield on its bonds.

Bonds rated "AAA" are the most reliable. These are large systemically important companies, usually with state participation.

Bonds rated from "A-" to "AA+" are reliable securities. They are invested in by pension funds and other institutional investors.

Bonds rated from "BBB-" to "BBB+" are a transitional category. These may be reliable companies that are sensitive to adverse market and economic events (for example, an increase in the key interest rate).

Bonds rated from "B-" to "BB+" are high-yield issuers (HY). The risks are high, as is the yield. These may be small and medium-sized businesses operating in risky sectors.

Bonds rated "CCC" and "D" are on the brink of default. The risks for these securities are maximum.

This overview was presented by Yulia Grishchenko, Ph.D. in Economics, Head of the Department of Financial and Investment Management at the Faculty of "Higher School of Management" of the Financial University under the Government of the Russian Federation, and a member of the Expert Council on Listing at the Moscow Exchange.