By Sean Keating
Russia’s bond market is developing into a big source of rouble-denominated, long-tenor infrastructure debt. At the forefront of that development have been issues by Russian Railways.
The escalating Ukraine crisis has done little, so far, to temper appetite for Russian bond issuers, even at the international level. Although Vladimir Yakunin, president of Russian Railways, is one of the 20 individuals named on the US sanctions list, and a number of international syndicated loans for Russian borrowers have been put on hold, the state-owned rail company’s most recent €500 million nine-year issue sold well against the backdrop of the Crimea annexation, benefiting from a flight to quality.
To date, Russian infrastructure bonds have not been the non-recourse project bond facilities typical of some European and Middle Eastern projects. Russian infra bonds are corporate-, municipal- or sovereign-backed. But the maturity on these issuances is lengthening and extending the yield curve.
Russian Railways’ offerings, for example, have given investors the opportunity to buy 30-year corporate debt in the rouble market for the first time. And announcements by the government of Vladimir Putin are, for the first time, actively encouraging pension funds to take big stakes in this relatively new market.