Agribusiness companies can enter the securities market more actively

Today’s conditions are such that for many farmers entering the securities market would be a good option, but so far few people are willing to do this.

Today, when the key rate of the Central Bank is 16%, bank loans are not the most convenient option for most companies to receive money for further development.

An alternative would be to enter the securities market through the issue of bonds or shares, says Maria Romantsova, Managing Director for Debt Capital Markets at Finam.

She notes that few people are present on the securities market in Russia today. We are talking about 385 companies that issued bonds, and only 205 companies offer shares.

This is a drop in the ocean, since today in the Russian Federation over 30 thousand companies could enter the bond market, and about 3 thousand have the opportunity to issue their shares.

According to Romantsova, this would enable companies to attract significant funds, including from individuals, many of whom see the potential of the agricultural sector and would be ready to invest in it.

Another problem that entering the securities market solves is sanctions.

Many foreign banks have long been unwilling to issue loans to Russian companies, and Russian banks, in turn, are afraid of falling under sanctions themselves for cooperation with certain companies.

Issuing bonds, and subsequently shares, would be a good way to circumvent these difficulties.

In addition, foreign investors from non-Western countries would also probably be interested in investing in Russian agricultural companies.

In many cases, we could even talk about the implementation of large projects.

For example, Russian farmers and exporters today require river-sea vessels to deliver their products to Iran and Egypt. Attracting investments from investors directly from these countries, as well as from others, could become an additional financing tool that allows the implementation of these projects in the shortest possible time.

At the same time, the conditions for entering the securities market may not seem attractive enough at first glance.

Small companies are usually offered 200 million rubles for a period of up to 2 years at a rate of 18% per annum, which looks quite high.

But we must also not forget about the benefits that are offered to companies entering the capital market; taking this into account, the conditions look much more attractive.

At the same time, experts believe that the Central Bank’s key rate will remain high for a long time, so it’s time for companies to start looking closely at the securities market.