Pathfinder Russian road PPP nears financial close

The Moscow-Minsk M1 road, awarded to a consortium comprising Russian and international firms, is close to signing financial close documentation. A bond issue guaranteed by the Russian government covering a significant amount of the project’s cost was instrumental in securing the close.

Glavnaya Doroga, a consortium of Russian and international firms, is nearing financial close for the Moscow-Minsk M1 – the first Russian road public-private partnership to do so, a source close to the deal told

The road project, also known as the Odintsovo Bypass, reached commercial close last year with a consortium led by Russian investment firm Leader together with European developers Alpine (Austria), Brisa (Portugal) and FCC (Spain), as well as Russian construction firm Stroygazconsulting.  It will connect Moscow’s city centre to the existing Moscow-Minsk highway over 19 kilometres, aiming to ease congestion on the latter.

Instrumental in securing financial close for the $750 million project was the government’s recent decision to approve a guarantee for a $282 million bond issue by the winning team, after the concessionaire told the government the project was unlikely to reach financial close solely with bank debt. The bond will mature in 2027.

Considering that the Moscow-Minsk PPP should also receive about $379 million from the federal budget, the amount of bank debt involved could end up being around $89 million. This relatively small amount may allow the ruble-denominated project to be financed solely by Russian banks, bypassing international banks wary of taking on currency risk.

The financial close should pave the way for the larger, €1 billion Moscow-St. Petersburg highway, the country’s second road PPP, to reach financial close in the near future. That road was awarded to a consortium led by French infrastructure group VINCI.