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Russian companies issued almost as much debt in eurobonds in the first five months of 2017 as throughout the whole of last year, showing foreign investors remain hungry for Russian paper even as they cool on the country’s equities.

Data compiled by PwC show Russian companies raised $12.9bn in 23 sales so far this year on bonds with an average five years’ maturity (the median) compared with $13m from 29 sales in 2016.

The average deal size in 2017 is $561m, up from $448m last year and yields are averaging at about 5 per cent. This compares with 5.8 per cent from the JPMorgan EMBI+ composite average yield this year.

But Alexander Afanasiev, chief executive of the Moscow Exchange, said high yields unavailable elsewhere on other emerging markets were helping to drive the boom in Russia’s fixed income market, which rose 91 per cent year-on-year in the first quarter of this year.

“Attracting capital [ . . .] isn’t as attractive to issuers as debt,” Mr Afanasiev said, as companies are now able to raise money through bonds for longer terms than Russian bank loans offer. “These issuers are helping create a reliable, longer term yield curve.”

The success of the fixed income market comes even as gross domestic product growth is forecast to be a sluggish 1.5 per cent and equities are down 16 per cent since the start of the year.

“Nobody thinks it’s a good market but, with limited new supply, the technicals are very favourable,” said a Russian fund manager.

Investors often will favour bonds if growth is sluggish and Russia’s central bank said last week that it would probably cut interest rates further at intervals this year but there would be caution in order to reach its 4 per cent inflation target.

Foreign investors make up the bulk of the buyers. On Thursday, online lender Tinkoff Bank raised $300m from a perpetual bond with a 9.25 per cent yield that was nearly three times subscribed.

About 70 per cent of the investors who bought the bond, the third perpetual bond from a Russian company, were foreign, according to the bank.

The boom has also driven foreign interest in Russian sovereign debt . Mr Afanasiev said about 28 per cent of investors in Russia’s rouble-denominated OFZ market are foreign, up from 16 per cent in 2015.

Russia’s markets ground to a halt in 2014 after US and EU sanctions, which ban some Russian state-owned companies from raising long-term debt on western capital markets, and a fall in the oil price led to the country dipping into a two-year recession.

The fixed income market picked up last year as market conditions began to improve, led by large issuances from state-run companies like Gazprom, which issued a €1bn bond and two SFr500m bonds.

This year has seen first-time issuances from companies like aluminium giant Rusal, which has already issued two bonds totalling $1.1bn as well as a “panda bond”, which now find it easier to raise financing on the fixed income market than directly from banks.

Sberbank’s corporate lending went down 2.5 per cent year-on-year in the first quarter of 2017, although the bank still expects to see growth of 8 per cent by the end of the year.

A senior executive said the bank would be forced to cut lending rates to compete with cheaper fixed income spreads.

“Yields are so low everywhere and people are looking to earn money,” said the chief executive of a large Russian conglomerate that is looking to tap the eurobond market. “We don’t have to make huge promises this time. New investors just say ‘what’s the yield?’”

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