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  • 2009 October 28

    Ust-Luga to be implemented

    Ust-Luga Company JSC (Leningrad region) counts on inclusion of complex investment project of Ust-Luga commercial seaport development (the Gulf of Finland, the Baltic Sea) into the list of investment projects claiming to obtain Federal Budget support guarantees in 2009 or 2010. The bonds are expected to be emitted to the open market. As per the experts opinion, an annual interest of 7-9% will be an acceptable return level on the bonds for investors under the current market conditions.

     

    Alexander Novak, Deputy Minister of Finance of RF, stated, the port in Ust-Luga may become the first to emit infrastructure bonds under RF guarantees; and the bonds can already be placed in December 2009.

     

    Besides (the information is not confirmed), Ust-Luga port is the only seaport in the list of projects claiming to obtain state guarantees under infrastructure bonds to the date.

     

    As PortNews IAA learnt from Marina Kondratieva, Financial Director of Ust-Luga Company JSC, the company is planning to obtain state guarantee in 2009 to emit infrastructure bonds of 7-10 years circulation term. Under the RF federal law (№230 dated 03.10.09.) ‘On introduction of changes into the Federal law ‘On Federal budget of 2009 and scheduled period of 2010 and 2011’’ the country’s budget of 2009 allows for RUR 75 bn ($2.5 bn) financing of the selected projects and emitters of the state guarantees

     

    The procedure of projects selection is not defined yet. The Ministry of Finance is currently elaborating the draft regulation of the RF Government that will define the rules of infrastructure projects selection for submission of according budget guarantees. As per Ust-Luga port’s representative opinion, the process may be completed in the nearest future as the budget funds are allowed for the year 2009 which almost over already.

     

    ‘The project of Ust-Luga commercial seaport development meets all the possible criteria, that an investment project should comply with, the project that is implemented within Russian economy modernization and that has federal meaning, and is a worthy claimer for obtaining of state guarantees that will secure necessary external investments required by the project development schedule,’ stated Marina Kondratieva.

     

    That is why a preliminary set of documents made by Ust-Luga Company JSC is forwarded to the Ministry of Finance. The Ministry is currently considering the possibility of state guarantees submission on the complex port development project, but the company is ready to provide separate projects for infrastructure bonds emission as well.

     

    In case of positive decision the bonded loan will be issued for the period of no less than 7 years. An open market emission of capital funds is envisaged. As per Kondratieva, large financial structures such as VTB-Capital, KIT-Finance, Troika-Dialog can initiate the loan.

     

    It is too early to speak about the amount of bonded loan as the final number of projects claiming for budget funds obtaining is not defined yet. ‘We tend to issue infrastructure bonds by 2009 and consider this financial means to be one the ways of attracting funds into our project,’ stated Marina Kondratieva.

     

    As PortNews IAA learnt from Alexander Osin, Chief Economist of UK Finam-Management, investors’ interest to the aforementioned bonds will be defined by investment profitability and taking into consideration the decrease of indicative annual bond rate in Russia to the level prior to recession, an annual interest of 7-9% will be an acceptable return level on the bonds for investors under the current market conditions.

     

     

    ‘I assume the current situation at the debt market allows hold an auction on placement of the given group of bonds, taking into consideration dynamics of state and corporative debt profitability,’ Alexander Osin is sure.


    Speaking on the potential infrastructure bonds nominal, the expert explained the nominal of all the infrastructure bonds emitted by special project organization (SPO) shall not exceed the charter capital over 10 times. In its turn, charter capital SPO should be not less than 10% of infrastructure project cost.

     

    Nadezhda Malysheva, Vitalii Chernov

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