The Central Bank of Russia published an assessment of Russia’s nascent convertible bond market and concluded that issuance rules should be updated to better reflect the needs of issuers and investors. The proposed direction is to make the instrument more usable and attractive, including for companies seeking financing ahead of an initial public offering. The central bank noted that the first block of amendments to convertible bond issuance rules was introduced in 2018–2019, but issuance has remained limited. It attributed this to insufficient flexibility for issuers in setting conversion parameters, low investor appetite for a complex product requiring deeper risk-benefit analysis, and adverse conditions including macroeconomic uncertainty and the exit of large venture funds from the Russian market. To address these constraints, it proposed establishing conditions for using convertible bonds at the pre-IPO stage and considering a shift from fixed to variable conversion ratios so companies can better adapt the instrument to their needs and the market environment.
Central Bank of Russia 2025-06-11
Central Bank of Russia proposes regulatory changes to support pre-IPO convertible bonds and more flexible conversion terms
The Central Bank of Russia assessed the convertible bond market, recommending updates to issuance rules to enhance usability and attractiveness for issuers and investors, particularly pre-IPO. Despite amendments in 2018–2019, issuance remains limited due to inflexible conversion parameters and low investor interest amid macroeconomic uncertainty. Proposed changes include adopting variable conversion ratios to better align with market conditions.