Within the framework of the business session “The sub-federal debt market: we are waiting for changes”, an exchange of views was held between the representatives of regulators, the regions and the financial industry regarding the prospects of the sub-federal loan market. Serious changes were made to the Budgetary Code in 2019, and the Ministry of Finance of Russia and the regional financial authorities will soon have to restructure their work.
The session was opened by the director of the State Debt and State Financial Assets Department of the Ministry of Finance of the Russian Federation Konstantin Vyshkovsky with a report on the new administration system: “Based on the best world practices, we improved the debt sustainability system and revised its threshold values. All regions will be classified according to high, medium and low debt sustainability, which will be the basis for the freedom granted in the future to a constituent entity on the part of the central administrative apparatus. ”
He added that interaction with the regions in the format of methodological recommendations did not justify itself. It wasn’t possible to inspire seriously the regions towards the practices developed by the Ministry of Finance. In the future, the regulation documents will become more strict.
During the discussion, the speakers drew attention to the absence in Russia of a developed secondary market for regional investment debt, because the placement of debt and the bond issuance is not in a competitive environment. “Sub-federal debt is very interesting for all investors, because its profit is higher and its risks are lower. The percentage of individuals in the main market is 13%, this is a lot. But the situation on the secondary market is the opposite, although the individuals are also active here, ” — the managing director of the share market, the member of the Management Board of “Moscow Exchange” PJSC Anna Kuznetsova commented on the situation.
However, in the current macroeconomic situation, the speakers see an opportunity for innovation. This will allow to avoid serious crisis situations in the field of regional debt and to begin working with fundamentally new players. “The configuration of the product depends on who buys bonds. Historically, these are institutional organizations, such as banks. But what can be offered to an absolutely retail client who has never worked with bonds? It is necessary to provide quasi-deposit instruments, ” — suggested the Advisor to the First Deputy Chairman of the Bank of Russia Elena Tchaikovskaya.
Next year will be a transitional one for the sub-federal debt market, as all innovations will come into force by 2021. All participants expressed hope for the emergence of new issuers and called for becoming active the old ones. The First Deputy Minister of Economics and Finance of the Moscow Region Ekaterina Zinovieva added that in the next budgetary cycle they will increase the volumes of investment loans and make active use of new tools.