RZD wants to keep short-term debt at up to 15% of portfolio, FX debt up to 40%
MOSCOW. Feb 20 (Interfax) - Russian Railways plans to maintain short-term debt at up to 15% of its loan portfolio and forex debt at up to around 40%, the company said on its website.
Moreover, Russian Railways has maintained guidance for a maximum net debt/EBITDA ratio to Russian Accounting Standards (RAS) of 2.5x. "The borrowing strategy is aimed at a lengthy weighted average term on obligations and a balanced repayment schedule with the optimization of the cost and structure of the loan portfolio," the company said.
RZD officials said back in 2013 that the company planned to keep the FX portion of the loan portfolio at 25%-30% and short-term portion at 20% or below. A couple of years later, RZD pursued a policy of lengthening debt maturities, mainly with instruments involving public money.
After the ruble's devaluation at the end of 2014, the debt of the rail monopoly's parent company grew markedly, due above all to the FX portion, and approached 1 trillion rubles. RZD then adopted a policy of lowering its debt, gradually replacing FX debt with debt denominated in rubles, the currency in which RZD reports its core revenues. RZD executives did, for example, underscore the company's interest in ruble-denominated Eurobonds.
RZD used a seven-year RUB Eurobond issue worth 15 billion rubles last autumn to buy back 70 million Swiss francs from a CHF 525-million bond issue a day after placing $500 million in four-year USD notes, which it used to buy back bonds from a $1.5-billion issue maturing in April 2017. RZD might use the same combination of debt instruments before then.
"Work done to optimize the loan portfolio resulted in the structure of the portfolio as of December 31, 2016 corresponding to target indicators: 38.1%, or 344.8 billion rubles in FX borrowing and 8% or 76.2 billion rubles short-term borrowing," the company says in information posted on its website. RZD clarified that "loan portfolio metrics are based on management reporting and do not reflect accounts payable on accrued interest." The average loan tenor is around 10 years.
The overall loan portfolio, including bank loans, ruble-bonds and Eurobonds, fell 7% during 2016 to 905.3 billion rubles. "The reduction was caused by a revaluation of FX borrowing as the ruble's exchange rate strengthened in the course of 2016," RZD said.
Structure of the RZD loan portfolio (bln rubles):
| 2013 | 2014 | 2015 | 2016 | |
| TOTAL | 606 | 843 | 969 | 905 |
| Currency: | ||||
| - rubles | 66% | 56% | 53% | 62% |
| - dollars | 16% | 19% | 22% | 19% |
| - euros | * | 13% | 12% | 10% |
| MATURITY: | ||||
| - over 3 yrs | 71% | 66% | 74% | 77% |
| 1-3 yrs | 22% | 19% | 19% | 15% |
| under 1 yr | * | 15% | 7% | 8% |
| INSTRUMENTS | ||||
| - Eurobonds | 39% | 47% | 50% | 44% |
| - local currency bonds | 56% | 44% | 50% | 54% |
| TYPE OF INTEREST | ||||
| - fixed | 75% | 76% | 70% | 68% |
| - "inflation +" | 25% | 24% | 30% | 32% |
* company info does not specify values under 10%
RZD's current financial model envisages that funds are raised to deliver projects with payback in up to 15 years using debt instruments; projects with payback in 15-30 years with public money, for example via infrastructure bonds; and projects with payback in more than 30 years via capital contributions. Infrastructure is currently maintained by amortization.