Liquid Corporate Bonds Trade Mixed in Last Session of Week

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In the last trading day of the week, the most liquid corporate bonds are trading in the "red zone" with no unified trend:

- Polyus PBO-04 bond (ISIN code - RU000A108L81) -1%;

- Borets Capital 001P-05 bond (ISIN code - RU000A10EK71) -0.5%;

- AFK Sistema Bond Issue 14 (ISIN code - RU000A101XN7) -0.4%.

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

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

Bonds rated from "A-" to "AA+" are reliable securities. Pension funds and other institutional investors invest in them.

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

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

"CCC" and "D" bonds are on the brink of default. The risks for such securities are maximum.

This overview was presented by Alexey Grishchenko, Ph.D., Professor at the Department of Operational and Sectoral Management of the Faculty of "Higher School of Management" at the Financial University under the Government of the Russian Federation.