Russian Corporate Bond Market After 2022: New Challenges and Financial Innovations
Abstract
This article examines financial innovations in the Russian corporate bond market as a response to structural changes in the economy following 2022. The tightening of monetary policy has led to prohibitively high interest rates for domestic companies, while the sanctions have closed access to external capital markets. Despite these constraints, Russian firms have successfully adapted to the new environment and even increased the volume of primary bond issuances. The study shows that financial innovations played a significant role in this adaptation process. Using a large dataset on corporate bond issuances after 2022, we identify the changes in the patterns of bond issuance. Three main types of financial innovations are highlighted: floating-rate bonds, new locally denominated currency bonds, and exotic instruments such as discount notes and convertible bonds. Our findings indicate that financial innovations after 2022 contributed to preserving and expanding corporate bond issuance while supporting the recovery of liquidity in the Russian bond market. In some cases, the new instruments reduced borrowing costs and partially substituted for market segments that became unavailable after 2022. At the same time, the recovery of the bond market cannot be attributed solely to financial innovations, but also reflects broader economic stabilization, market adaptation to the new institutional environment, and the development of domestic market infrastructure.