Page 82 - RUSRptOct18

8.5.1 Fixed income - bond news
Russian state railway monopoly Russian Railways (RZD) plans to buy back three issues of Eurobonds maturing in 2020, 2022, and 2024 for a total $700mn, Reuters said on September 13 citing the company. Russian assets are under heavy sanction risk pressure and some companies might try to use the momentum to buyback its debt off the market cheaply. Previously in January-June the company posted about $1bn increase in working capital and flat capex ($4.8bn or 50% of the full-year plan) resulting in negative free cash flow of about $2.6bn, VTB Capital estimated on August 31, with the shortfall in free cash flow (FCF) funded by a reduction in the cash balances and a placement of local bonds.
Russia's largest gold miner Polyus Gold has bought out its own Eurobonds maturing in 2020, 2022, 2023, and 2024 for a total of $300mn, the company said on September 14. Many Russian assets are under a high risk of sanction and some companies have been taking advantage of the resulting fall in prices on bonds to to buyback their debt cheaply. Previously Russian Railways said it will buy out $700mn of own bonds , and Industrial-Metals Holding bought bonds worth $100mn. Polyus has four Eurobonds issues in circulation worth $2.55bn and ruble bonds worth RUB15bn. In January-June 2018 company's gold output was 1.66mn ounces, its Ebitda stood at $844mn, net debt was $3.2bn at 1.8x to Ebitda. Polyus had $908mn in cash and equivalents as of end of June, enough to afford the bond buyback.
82 RUSSIA Country Report October 2018 www.intellinews.com