Russia's corporate bond defaults hit record high amid economic strain
Corporate bond defaults in Russia surged last year, according to the Bank of Russia's 2025 Financial Instruments Review. A total of 36 issuers failed to meet coupon payments or redemptions, leaving combined liabilities of 55 billion rubles. The rise in defaults has also drawn more private investors into distressed debt markets.
The report revealed that 28 companies defaulted for the first time in 2025, representing 5.4% of all corporate bond issuers. The hardest-hit sectors included construction, real estate, finance, and wholesale trade. Unlike previous years, defaults were less concentrated, with the largest single issuer accounting for just 26% of the total.
Private investor involvement in troubled bonds grew sharply. The number of individuals trading distressed debt rose from 48,000 in 2022 to 163,000 in 2025. Most of these bonds were accessible to unqualified investors, who now hold 45% of all distressed bond exposures—up from 8 billion rubles in 2022 to 22 billion rubles last year. Analysts linked the spike in defaults to mounting corporate debt pressures. Non-performing loans in the banking system reached 10.4 trillion rubles by September, a 1.9 trillion ruble increase since January. Economic strain from Western sanctions and the Ukraine war worsened financial instability. PSB Bank, a major lender, set aside 300 billion rubles for credit losses—three times the previous year's provisions—signalling deeper banking sector troubles first flagged in early 2025.
The Bank of Russia's findings highlight a growing trend of corporate defaults and rising private exposure to risky debt. With non-performing loans climbing and key banks increasing loss provisions, the financial system faces ongoing pressure. The shift in investor behaviour suggests broader market adjustments to economic uncertainty.
