Russian Railways invest RUB 183bn (USD 5.5bn) in development in Jan-Jul.

By bne IntelliNews August 6, 2012
In Jan-Jul, the Russian Railways (RZD) invested RUB 183bn (USD 5.5bn) in its development, company's president Vladimir Yakunin said. The total investment plan for 2012 remains at RUB 428.4bn. The company launched new routes between Vladivostok and the nearby Knevichi airport, Sochi and neighboring Adler, and completed a new bridge in Sakhalin. Russian Railways is scheduled to open a second railroad station in city of Kazan on August 5. RZD in the coming 3-5 years plans to borrow RUB 60bn-RUB 80bn (USD 1.8bn - USD 2.4bn), PRIME reported this month citing a corporate finance rep of the company. This would include tapping the Eurobond market at least once a year, with the rest to be borrowed in RUB. In May, Fitch Ratings affirmed the foreign currency long-term Issuers Default Rating (IDR) and priority unsecured rating of RZD at BBB, outlook Stable. RZD's ratings are on the same level as Russian sovereign ratings (BBB/Stable) due to 100% state ownership and strategic role of the company, while reflecting strong ties with the state including yearly tariffs, capital investment and subsidies being approved by the government. At the same time Fitch believes that own business and financial indicators of the company comply with the BBB rating, it being held back, however, by short-term nature of tariff-setting, market risk on commodity cargo (coal, oil and iron ore), low geographic diversification and dependency on state financing in terms of subsidies and capital injections. Agency expects single-digit revenues growth in mid-term perspective, EBITDA of about 20%-25% and negative cash flow due to substantial capital investment program of about RUB 1.3tn in 2012-2014.
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