Fitch rates Russian Railways notes BBB

Fitch Ratings said it assigned RZD Capital Ltd.'s (BBB/stable) 8.30% ruble loan participation notes due 2019 and 5.70% dollar loan participation notes due 2022 senior unsecured BBB ratings. The new notes will be consolidated and form a single series with the outstanding RUB 25 billion 8.30% loan participation notes due 2019 and $1 billion 5.7% loan participation notes due 2022, respectively.

The notes will be issued on a limited recourse basis for the sole purpose of funding loans by RZD Capital to JSC Russian Railways.

The ratings are aligned with those of the Russian Federation (BBB/stable), its sole shareholder and reflect their strategic, operational and financial links, the agency said.

RZD's gross leverage was 1.2x EBITDA in 2011, up from 0.8x in 2010, while its net leverage remained at 0.6x EBITDA thanks to a large cash position at end-2011 from asset disposals, Fitch said.

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