The EDB assigns a part of its subordinated loan for the Central Ring Road 3 project to the International Investment Bank – a unique transaction in the Russian market

26 June 2020

Moscow, 26 June 2020. The Eurasian Development Bank (EDB) assigned a part of the mezzanine (subordinated) loan it had provided earlier for Russia’s largest infrastructure project – the construction of Central Ring Road 3 in the Moscow Region. The assignment agreement was made with the International Investment Bank (IIB) in the office of Avtodorozhnaya Stroitelnaya Korporatsiya (Road Construction Company, ASK), a project concession company, which is part of the AVTOBAN Group of Companies.

“This assignment of a subordinated debt is an interesting occurrence in the EAEU project financing market. Despite a relatively small amount compared to the overall value of the project, which is co-financed by Russia’s largest state-owned banks, it is a noteworthy event in the debt market because of its unique characteristics and the opportunities it creates for the development of the secondary market in underwriting mezzanine loans. Today, the EDB is the leading international bank in the countries of its operation – Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan – in terms of loans for public-private partnership projects with an innovative mezzanine financing scheme,” said Timur Abdullakhanov, Managing Director and Head of Transport and Infrastructure at the EDB.

The Central Ring Road is Russia’s first infrastructure megaproject, which is partly financed by the National Wealth Fund. The total project value is RUB 300 billion, of which RUB 150 billion will be extended by the National Wealth Fund.

Central Ring Road 3 will run parallel to the A-107 Small Concrete Ring in the north-east of the Moscow Region and connect M11, the new high-speed road linking Moscow and St. Petersburg, and the M7 Volga road. The highway will have four lanes with a designed speed of 140 km/hour and will include 69 bridge structures (17 bridges, five wildlife crossings, two pedestrian crossings, and 45 flyovers, including those to be built on four junctions).

The senior project lenders are Gazprombank, the EDB, and Sberbank. The concession to run the project has been granted by Russian Highways, a state-owned company.

The banks provide the loans to ASK as project financing. The project is being implemented under a concession agreement between ASK and Russian Highways made in 2016. The highway is scheduled to be commissioned in 2020.

The shareholders in ASK are the AVTOBAN Group of Companies (75 per cent), one of Russia’s largest players in road construction, and the EDB (25 per cent). 

Additional Information: 

The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB's charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. 

The EDB Media Centre:

Alexander Savelyev +7 (985) 765 23 59 (Moscow)  

Azima Sapargaliyeva +7 (777) 750 00 08 (Almaty)

Sergey Gorbachev +7 (916) 727 22 00 (Moscow)  

pressa@eabr.org

www.eabr.org

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