Second Russian road PPP reaches financial close

One day after financial close was announced for the Moscow-St. Petersburg highway, word comes from Russia that another road public-private partnership (PPP) – the Odintsovo bypass – has also reached financial close.
 
The road, also known as the Moscow-Minsk M1, will connect Moscow’s city centre to the existing Moscow-Minsk highway over 19 kilometres, aiming to ease congestion on the latter.
 
According to a statement from law firm Linklaters, which advised the winning team, the $850 million deal will be financed by bonds and the federal budget.
 
A spokesperson from Linklaters declined to elaborate on the funding structure but a previous report in the Moscow Times suggested some $379 million could be provided by the state budget. Deutsche Bank and Gazprombank, the team’s financial advisers, also declined to comment on the deal.
 
Key to the financial close was the government’s recent decision to guarantee infrastructure bonds issued by the concessionaire. These bonds will be linked to inflation making them particularly attractive to long-term investors such as pension funds and insurers.
 
The Odintsovo bypass was awarded last year to 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.
 
As reported yesterday on InfrastructureInvestor.com, the initial stretch of the Moscow-St. Petersburg highway became the first Russian PPP to reach financial close. The $2.1 billion deal, awarded to a VINCI-led team, will be funded with about $1.1 billion of bank debt and $342 million of government-guaranteed, inflation-linked, bonds.