Russian Railways successfully places long-term inflation-hedged infrastructure bonds
On 5 June 2013, Russian Railways successfully placed Series BO-18 infrastructure bonds with coupon payments linked to the consumer price index, the company's release says. The issue was for a nominal amount of 25 billion roubles, a maturity of 30 years and a coupon period of 6 months. The bond is not callable.
The rate on the first coupon was set by book-building and amounted to 8.20% per annum. The rates on the subsequent coupons will be linked to the consumer price index and calculated as the rate of inflation for the year plus 1% per annum.
The placement of infrastructure bonds with a maturity of 30 years is a record on the Russian long-term debt market for corporate loans.
"The issue of Russian Railways' infrastructure bonds represents a new mechanism for financing long-term projects which cannot be carried out by recourse to traditional market borrowings. The financing for these infrastructure bonds comes from pension funds managed by the State Asset Management Company Vnesheconombank which can now be used under these conditions thanks to the joint work carried out by Russian Railways, Vnesheconombank and ministries since 2011," said Vadim Mikhailov, Senior Vice President at Russian Railways, during a briefing in Moscow on 5 June 2013.
Pavel Ilyichev, Deputy Head of the Corporate Finance Department at Russian Railways, said:
"The market has a new financial instrument, which in the future will radically change the structure of the domestic financial market. Infrastructure bonds are becoming a new and reliable way of investing pension savings over a long-term horizon. Currently, there are no tools on the market that can be compared to the Russian Railways' infrastructure bonds in terms of cost, reliability and term."
The issue was organised by VTB Capital, Gazprombank (OJSC) and CJSC Sberbank KIB.
Settlement of the issue was carried out on the MICEX on 5 June 2013.
