14 September 2023

Russian Highways State Company has told investors about their prospective projects

The Russian Highways State Company held a meeting with investors in the format of business breakfast. The event was attended by representatives of the Government of the Russian Federation, the Bank of Russia, the Ministry of Transport of Russia, the Ministry of Economic Development and the Ministry of Finance of Russia, lenders, development institutions, management companies and rating agencies.
The participants of the business breakfast were addressed by Deputy Minister of Finance Irina Okladnikova, Chairman of the Board of the Russian Highways State Company Vyacheslav Petushenko, First Deputy Chairman of the Board for Economics, Finance and Strategy Sergei Pernikov and Head of Capital Markets of Gazprombank Denis Shulakov. They discussed principal accomplishments, the recently endorsed long-term Activity Program, as well as the prospects for the development of the State Company.
In his welcoming speech, Vyacheslav Petushenko drew attention
to the systemic importance of the State Company as a central institution for the expansion of the road sector in the Russian Federation. “Providing the populace with high-quality highways is one of the most crucial tasks today. To achieve this, we are implementing grand-scale infrastructure projects such as the M-12. In the future, we plan to reconstruct sections of the M-1, M-3, M-4 highways, build the South-Western Bypass Road, Southern Cluster and Ring Road-2.”
Irina Okladnikova emphasized the well-coordinated and professional operation of the State Company and the productive interaction with the Ministry of Finance. “The State Company comes up with an initiative to shift the timing to the earlier dates, and we make such decisions every time. This suggests that the company is fully prepared for the huge amounts of financing that are available now.  From all projects which the President and Chairman of the Government of the Russian Federation decided to finance from the National Welfare Fund, the Russian Highways was the first to receive funds, having gone through all demanding stages of approval. This suggests that the State Company balances both the construction and financial interests. I am confident that together, by consolidating our efforts, we will be able to accomplish all the large-scale tasks that are set for us,” stressed the Deputy Minister of Finance.  
In his speech, Sergei Pernikov told about the key performance indicators of the State Company  since its foundation. Currently, the Russian Highways has about 4.5 thousand km of roads under its trust management. Over 2.2 trillion rubles have been invested in the road industry, of which the State Company attracted 750 billion rubles of extra-budgetary funds.
“By the end of 2023, we are planning the early commissioning of the M-12 Vostok Highway to Kazan ; since 2010, there has been a significant expansion of the road network in the trust management of the State Company by more than 3 thousand km ,” remarked Sergei Pernikov. He also presented the main program document approved by the Government in August 2023 — the Activity Program of the Russian Highways State Company for the long-term period (2010 – 2030). Pursuant to the Activity Program , the Company's income is expected to double, considering the successful materialization of the prospective projects, and the length of highways in the trust management of the State Company will keep growing by more than 1.4 thousand km.
By the year 2030, the total estimated length of highways in the trust management of the Russian Highways will reach over 5.7 thousand km, with the investment volume totaling approximately 3.5 trillion rubles (factoring out the implementation of the prospective projects).
In recent years, the State Company has been one of the most active credited parties in the local bond market and currently ranks fifth among the largest issuers of ruble bonds in terms of the volume of securities in circulation. Participants of the business breakfast stressed that the Russian Highways is a reliable borrower not only in the bond market, but also for the state, timely servicing their bonds both to the state and the market. The ACRA and Expert RA agencies assigned credit ratings to the State Company at the level of AA(RU) and ruAA+ (stable outlook), which is two and one notches lower than the sovereign rating of the Russian Federation.
In the coming years, it is planned to attract new volumes of extra-budgetary funding for the implementation of projects for the reconstruction of the M-1, M-3, M-4 sections and the prospective projects. To successfully attract financing and optimize the cost of bond borrowings ensuring the profitability of projects, the company is exploring opportunities to rise the investment attractiveness of its bonds, and is also considering new tools for attracting financing.
During the discussion, the business breakfast participants asked questions regarding the activities of the State Company, its plans to attract bond financing, indicators
of financial statements, and also discussed aspects of the construction of roads and related infrastructure.
The participants mentioned the high attractiveness of the State Company as an issuer of securities. The Russian Highways significant potential for the efficient bond placement is ensured by financing and their list of projects for implementation, which are approved by program documents for the period until 2030.
Business meetings with investors allow the State Company to plan more flexibly for attracting extra-budgetary financing, choosing popular instruments and optimal configurations of transactions to attract debt capital.
Following the event, Vyacheslav Petushenko emphasized that the State Company would hold meetings with investors on a regular basis to increase the transparency of the Company’s activities and the degree of investor confidence.