Fitch Assigns Russian Railways' LPNs Expected 'BBB' rating
22.03.2010 (15:58)
On March 19, 2010, Fitch Ratings assigned RZD Capital Limited's proposed loan participation notes (LPNs) an expected senior unsecured 'BBB' rating. The final rating is contingent upon the receipt of final documentation conforming materially to information already received and details regarding the amount and tenor.The LPNs will be issued on a limited recourse basis for the sole purpose of funding a loan by RZD Capital Limited to JSC Russian Railways (RZD). The gross proceeds of the loan will be used by the company in the ordinary course of its business. The noteholders will rely solely on RZD's credit and financial standing for the payment of obligations under the notes.
RZD's Long-term foreign and local currency Issuer Default Ratings (IDRs) are 'BBB', respectively, with Stable Outlooks. RZD's Short-term foreign and local currency IDRs are 'F3', and its National Long-term rating is 'AAA(rus)' with a Stable Outlook.
RZD's ratings are aligned with those of the Russian Federation, reflecting its 100% state ownership and strategic importance. The rating alignment further captures state involvement in tariff-setting, overall financial planning, direct equity injections, funding by government-controlled banks and the provision of subsidies for the freight and loss-making passenger transportation divisions. Direct subsidies are set to represent an increasing proportion of EBITDAR (10% in FY08), further strengthening RZD's links with the state, but also its reliance on the government.
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