Fitch Ratings assigns Russian Railways Upcoming Notes

Fitch Ratings has assigned RZD Capital PLC’s upcoming loan participation notes issue an expected senior unsecured BBB rating in line with JSC Russian Railways Long term Issuer Default Rating of ‘BBB’/Stable.

The final rating is contingent upon the receipt of final documentation conforming materially to information already received and details regarding the amount, coupon rate and maturity.

The notes will be issued on a limited recourse basis for the sole purpose of funding loans by RZD Capital to RZD. The proceeds of the loans will be used by RZD in the ordinary course of its business including for funding the company’s investment programme and the repayment of indebtedness. The noteholders will rely solely on RZD’s credit and financial standing for the payment of obligations under the LPNs.

OJSC Russian Railways was established on October 1st 2003 on the basis of the Ministry of Railway Communication. The state owns 100% of the company’s shares which owns a railway system stretching for 85.5 thousand kilometer.

IFRS net profit of Russian Railways for H1 2012 increased by 11% YoY to RUB 74 billion against RUB 67 billion the year before. Revenue increased by 5% and was RUB 745 billion against RUB 710 billion for H1 2011. Operating profit of the holding totaled RUB 86 billion EBITDA increased by 13% to RUB 211 billion.

According to the information and retrieval system DataCapital, net profit of Russian Railways for 9 months 2012 decreased by 29% to RUB 39.881 billion from RUB 56.075 billion the year before. Revenue grew by 6% to RUB 1.02 trillion from RUB 962.286 billion, GP by 11.16% to RUB 92.824 billion from RUB 83.505 billion, pre-tax profit decreased by 12.3% to RUB 79.242 billion

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