Loans are gradually becoming even more financially beneficial for SMEs than bonds, even with a subsidy for coupon payments.
Interest rates are rarely a decisive argument for raising money in the stock market, but gradually the growth in the difference between bond rates in the stock market and rates on loans to SMEs for a period of more than 1 year becomes statistically significant. If in the summer of 2019 the difference between them averaged 4%, then by the fall of 2020 it had already become 6%. A government subsidy for the coupon payment of 2/3 of the key rate in 2019 formed an advantage over the bank rate. Now, even with this subsidy, the loan is 3.5% more profitable than the average bond rate.
Support measures for SMEs are provided for both in the stock and credit markets. On the latter, in fairness, they are much more substantial and more effective. Under the concessional loan program in 2020, loans were provided in the amount of 900 billion rubles, this year it is planned to provide another 700 billion. In addition, granting the right to banks not to worsen the quality of loans allowed restructuring many loans to small enterprises. Compared to bonds, which also have a lot of associated expenses and subsequent obligations, credit looks like an easier way to attract money to a business, even if it is already quite large.
Against this background, bonds become a tool for the implementation of specific conscious goals by a company that wants to receive financing in the stock market: to form a public credit history, ensure liquidity of funds and assets, get a stronger negotiating position with creditors, etc. That is, to solve problems that are typical for a mature business.
A positive scenario for the development of the debt market is also quite probable, when bonds will be used for long-term funding, and loans – for short-term fundraising. Hints of this trend can be seen even now: the average maturity of bonds in the Growth Sector is 3.9 years, while loans for less than a year account for more than half of the total pool of bank loans issued to SMEs.
In any case, such a trend increasingly creates conditions for reducing the issuers’ pipeline even before the organizers pass the filter. Perhaps this is even for the best: problems in the public debt market cannot be solved as easily as in a bank.
Author: Ilya Grigoriev