Moody's rates Russian Railways notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to the proposed junior subordinated Swiss franc-denominated loan participation notes to be issued by, but with limited recourse to, RZD Capital plc.

“The Ba1 rating assigned to the proposed hybrid notes is two notches below RZD's baa2 baseline credit assessment (BCA) and its Baa2 long-term issuer rating, which reflects Moody's view that the notes will be deeply subordinated to the senior unsecured obligations of RZD and will rank senior only to its common shares and pari passu with its preferred shares. The notes will be perpetual and there will be no events of default. The issuer may opt to defer coupon payments on a cumulative basis,” the agency said in a press release.

RZD Capital will lend the proceeds to Russian Railways JSC, which will use them for financing or refinancing of its eligible green projects according to the published framework. Therefore, the noteholders will rely solely on RZD's credit quality to service and repay the debt, Moody’s said.

The ratings and outlooks of RZD and RZD Capital PLC remain unchanged.

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