Dmitry Medvedev Meets with VEB.RF Chairman Igor Shuvalov

13 august 2019 года
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Dmitry Medvedev and Igor Shuvalov discussed VEB.RF’s involvement in investment projects related to urban planning and development.

From a transcript:

Medvedev: When somebody mentions VEB as a development corporation, all manner of major economic projects usually come to mind. This is natural because VEB contributes to them in some way or other, by either lending to them, or acting as a guarantor, or participating as a partner. However, VEB also does other important things.

I’ve been to Tula recently and met with architects and builders. We discussed urban spatial development. By the way, your representative was there too. I know this issue has also become an important area where VEB works as a development institution, and you invest both intellectual and financial resources. Tell me more about it, will you?

Shuvalov: Our supervisory board, which you chair, indeed regularly considers the largest transactions that contribute to economic development in Russia. We have prepared several such major transactions. The board are to meet in the next few days to discuss them under your supervision. These transactions promise to be an exciting experience. Speaking of urban development and the urban economy, this is now one of our main concerns.

We paid close attention to preparations for the Tula meeting and its outcome. It was a very interesting event, attended by young architects and urbanists. The new legislation on State Development Corporation VEB.RF—as related to functions and coordination— allows us, Dmitry Anatolyevich, to take a basically different approach to urban development. As you instructed, the scope of coordination extends to VEB.RF, Russian Export Center, DOM.RF and Russian Small and Medium Business Corporation.

We are looking to invest adequately in different segments of the urban economy. We have chosen 100 urban areas, the 100 largest cities in Russia, except for Moscow and Saint Petersburg. This doesn’t mean that we aren’t involved in projects there …

Medvedev: They can take care of themselves.

Shuvalov: They’re under the direct supervision, so to speak, of both the Government and the President. And they take full advantage of it.

Speaking of the 100 cities, we’ve agreed that a separate track is to provide training for city teams, those who manage the urban economy. And 109 projects for 45 of the 100 cities are currently under consideration separately. The projects are related to clean water, sewage treatment and work on upgrading urban public transit, building modern housing and transforming municipal services, and this is the right job for small and medium-sized enterprises. For this purpose, we use all the tools available to each development institution, including equipment leasing.

We send business missions, travel to the cities. Our joint business missions have already visited Vladivostok, Yuzhno-Sakhalinsk and Ivanovo. All our teams make preparations beforehand, studying the projects. When we then all get together to assess the projects, they not only give project presentations but also defend the projects. Our business units then start working on the projects. We make sure it’s understood that loan agreements need to be signed within a certain time to set any project in motion. We’ve already achieved something tangible. For example, we are preparing to approve the loan agreements in Ulyanovsk and Nizhni Novgorod. We’re also organising a high-profile trip to Udmurtia, where we were a year ago, to see how the projects are progressing. Overall, we do exciting, well-coordinated work. We work in close cooperation with the Ministry of Economic Development; they find urban planning and development very important too. As for the Ministry of Finance, we are currently collaborating with them to modernise urban public transit in partnership with major organizations such as Transmashholding and Sinara Group. We’ve set up a good project in Moscow jointly with Transmashholding, and we are trying to extend this experience to other cities. We’ll ask you to allow us to use the National Wealth Fund for these purposes. As for the Ministry of Finance, we routinely work with them on specific details of the projects.

Medvedev: You should also work with the Construction Ministry. Strictly speaking, urban planning policy is in their hands rather than under the control of the Finance Ministry or the Economic Development Ministry.

It’s a big issue for a huge number of city dwellers. We understand that people who live in urban areas—especially other than the capitals, even outside the regional capitals, in small towns—want their places to be as comfortable at least in some way as the modern urban environment in the largest cities of this country.

This is really what is very important. How can we do it? The point is that our urban planning policy was not ideal in Soviet times, but it wouldn’t work now anyway because the requirements and economic conditions have changed. To formulate a new policy on urban planning and give training to prepare modern teams, as you mentioned, are an extremely important topic.

When I was in Tula, I saw: if it weren’t for the new team, if it weren’t for the work of the people who came to pursue various initiatives, nothing would probably have been done there.

That is why it’s necessary to help our regions and particular cities to build competencies and recruit people who are ready to do this. Somebody, of course, can come from the capitals; but it’s better to rely on the local workforce and train them. In this context, VEB has all the required competencies. I hope you’ll make use of them.

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Short-Term Exchange-Traded Bonds Issued by VEB.RF

9 august 2019 года
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VEB.RF issued short-term bonds in an additional placement to companies and corporations on 7 August 2019.

The Bank raised 13.6 billion roubles from bonds with a maturity of 14 days and a coupon of 7.02% p.a.

The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.

The arranger of the bond issue is Gazprombank.

The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.

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VEB.RF Finances Delivery of Rail-Buses to Sakhalin

6 august 2019 года
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VEB-Leasing, a subsidiary of State Development Corporation “VEB.RF”, has won the public auction held by RZD Trading Company. The project aimed at the renewal of the Sakhalin rail road rolling stock has financial backing from the Far East Development Fund (FEDF), a member of VEB.RF Group. The total project value exceeds 778 million roubles.

Three RA-3 rail buses are leased out to Sakhalin Passenger Rail Carrier, the operator of long-distance and commuter trains in the Sakhalin Region. Intended for commuter traffic at non-electrified sections of rail roads, the new rolling stock can be operated in extreme temperature conditions, which is of crucial importance for the Russian Far East. The official dispatch of the buses to Sakhalin took place at Metrowagonmash, a member of Transmashholding Group.

“Not only does this project contribute to quality of the regional passenger traffic but it also introduces to the market a new Russian-manufactured RA-3 rail bus,” VEB.RF’s Deputy Chairman and VEB-Leasing’s CEO Artem Dovlatov said.

“Worldwide, best cutting-edge solutions make railways a fast and comfortable means of transport. This is the way we want it to be in Russia’s Far East. The project is our joint contribution to higher quality of the Sakhalin transport and logistics infrastructure,” FEDF’s CEO Aleksy Chekunkov said.

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Lenders Disburse First Tranche under Project Financing Factory Programme to Develop Udokan Copper Deposit

1 august 2019 года
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In July 2019, VEB.RF, Gazprombank and Sberbank signed a syndicated loan agreement with the Baikal Mining Company (a member of USM Group) to develop the Udokan copper deposit.

“This is the first disbursement under the syndicated loan organised under the Project Financing Factory programme. The first Tranche is not large, only 340 million roubles. Further disbursements will be made in line with the approved construction schedule. The syndicated loan will be allocated to ensure a full operation cycle, including the delivery of primary equipment for a mining and processing facility, a leaching plant, building and installation work including that related to infrastructure construction, and delivery of ancillary equipment and transport,” Member of the Management Board Nikolai Tsekhomsky said.

“The start of disbursements is a crucial stage in the implementation of an ambitious national project. The borrower and the lenders have fulfilled the terms and conditions for disbursement in the shortest term upon the execution of the loan agreement, which proves a high level of competence of the participants, and a professional approach to structuring the deal and preparing loan and security documents. I am confident that these positive factors will contribute to the project’s successful implementation,’ Vice President and Head of Gazprombank’s Project and Structured Finance Department Alexander Ushkov said.

The deal is Russia’s largest project implemented using the Project Financing Factory mechanism, with VEB.RF acting as the project operator. The total project budget approximates to 3 billion US dollars, of which 1.79 billion US dollars is to be raised as a loan from the syndicate of banks for a term of twelve years. The syndicate participants are Gazprombank, Sberbank (up to 650 million US dollars each), and VEB.RF (490 million US dollars). VEB.RF also exercises powers of the lending manager, and Gazprombank is an arranger and a pledge manager.

All rouble-denominated tranches are government subsidised for the entire length of the loan in respect of fluctuations in the key interest rate. Interest expenses in the investment phase and any expenses associated with the project cost overrun will be covered out of the Factory’s special instrument, Tranche B, to be provided by VEB.RF.

After becoming fully functional, the Udocan mining and smelting facility will create more than 2,000 new industrial jobs aside from allied sectors.

Located in Trans-Baikal Territory, Udokan is Russia’s largest undeveloped copper deposit and one of the largest in the world. Its development includes the construction of an open-cut mine and Phase 1 of a mining and smelting facility to produce cathode copper and copper concentrate with the annual production of 125,000 tonnes, and the respective infrastructure.

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Short-Term Exchange-Traded Bonds Issued by VEB.RF

26 july 2019 года
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VEB.RF issued short-term bonds in an additional placement to companies and corporations on 24 July 2019.

The Bank raised 20 billion roubles from bonds with a maturity of 14 days and a coupon of 7.20% p.a.

The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.

The arranger of the bond issue is Gazprombank.

The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.

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VEB.RF and Bank BelVEB to Support BELAZ Russian and Belarusian Products Export to Third Countries

17 july 2019 года
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State Development Corporation “VEB.RF”, BELAZ JSC (BELAZ HOLDING Management Company) and Bank BelVEB JSC entered into an agreement on support of joint Russian and Belarusian products export to third countries in the total amount of 50 million USD. The signature ceremony took place during the 6th Forum of Russian and Belarusian Regions.

The document was signed on behalf of VEB.RF by its Deputy Chairman Daniil Algulyan, on behalf of Bank BelVEB by its Chairman of the Management Board Vasiliy Matyushevsky and on behalf of BELAZ by its CEO Pyotr Parkhomchik.

Bank BelVEB will act as an agent to prepare jointly with BELAZ a list of export contracts to be financed as part of products’ export to third countries. The agreement involves export of BELAZ’s heavy duty vehicles (quarry dump trucks, road-building, and underground and steelworks machinery).

“This is our pilot project. Today our focus is on support of joint products export to third countries,” Daniil Algulyan said.

For several years, the parties have been financing the supply of Russian high technology products to BELAZ, raw materials for quarry machinery manufacturing, including the projects with export of products made jointly with Russian companies.

The signature of the agreement became possible after changes in the Belarusian export law: a new Belarusian President’s Decree on Certain Measures for Realization of Belarus Made Goods was adopted in 2019. The law brought more opportunities for Belarusian goods export financial support. In particular, a new mechanism was introduced to reimburse third country exports related costs to non-resident banks and leasing companies; a client's bank may now use interbank loans and export documentary letters of credit with post-financing; financing of projects involving exports to third countries in USD and euro is now available.

Belarusian companies may now participate in the Russian programme for subsidising interest rates under a loan for import of Russian-made components which will be part of the final product. Third country clients may use the Belarusian programme for subsidising the interest rate under a loan for import of goods with Russian-made components from Belarus.

“We believe that today’s agreement is important in solidifying the readiness of the parties to a new format of cooperation for support of Russian and Belarusian products export to third countries. We intend to keep our strategic focus on development of this area of business. I am convinced that our cooperation with BELAZ testifies to a high level of trust of this company in our bank and to the demand in our export support services,” Vasiliy Matyushevsky noted and called upon other Belarusian and Russian manufacturers and exporters to seize new opportunities.

 “BELAZ has been cooperating with Bank BelVEB for more than 10 years. The bank proved itself as a reliable financial partner. The signed agreement will strengthen the position of the Belarusian Autoworks on third countries’ markets and well give an impetus to our export potential,” Pyotr Parkhomchik said.

The parties are confident that the signed agreement will enhance the economic integration of Russia and Belarus, cooperation between companies, banks and export-credit agencies of both states.

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2018 Single-industry Towns Top 10 Announced in Tolyatti

15 july 2019 года
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The award ceremony “Top 10 Russian Single-industry Towns” was held as part of the Forum on Development of Single-industry Towns on 15 July 2019. The winners include: Pavlovsk (Voronezh Region), Kotovsk (Tambov Region), Tutayev (Yaroslavl Region), Cherepovets (Vologda Region), Gubkin (Belgorod Region), Teykovo (Ivanovo Region), Naberezhnye Chelny (Republic of Tatarstan), Glazov (Republic of Udmurtia), Vyksa (Nizhniy Novgorod Region), Nevinnomyssk (Stavropol Territory).

One of the key Top 10 single-industry towns’ selection criteria is the efficiency of the local government authorities.

“The Top 10 features the towns which, in our opinion, are the most active in terms of development, use of available support measures, skills and knowledge gained during the training programme. These towns have comprehensive teams which strive for development,” MONOGORODA.RF’s CEO and Deputy Chairperson of VEB.RF Irina Makieva said.

The Forum on Development of Single-industry Towns organised by the Ministry of Economic Development of Russia with support of MONOGORODA.RF Fund took place in the technological park Zhigulevskaya Valley (Tolyatti). The idea to openly discuss support measures with mayors of all single-industry towns was brought up by Igor Shuvalov. This is a unique format which gives the municipalities an opportunity to discuss the most relevant issues directly at the federal level.

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Russian Ministry of Economic Development and VEB.RF Sign Agreement on Extension of Subsidies to Project Financing Factory

15 july 2019 года
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The Russian Ministry of Economic Development and VEB.RF signed an agreement on extension of federal budget subsidies to the Project Financing Factory in the form of asset contributions by the Russian Federation to VEB.RF. The subsidy will cover VEB.RF’s costs related to the Factory’s credits and loans.

The document was signed by Ilya Torosov, Deputy Economic Development Minister of the Russian Federation, and Nikolay Tsekhomsky, VEB.RF’s First Deputy Chairman - Member of the Management Board.

The Project Financing Factory’s programme and the rules for extension of federal budget subsidies to the Factory were approved by the Resolution of the Russian Government in 2018.

VEB.RF acts as the Factory’s operator for investment projects support. The Factory mainly relies on syndicated lending with government support, which increases the availability of loan facilities, expands loan maturities and allocates risks among the participants.

“First of all, we see the following advantages of the Factory for the state: this new debt financing instrument will have a positive impact on the economic growth by bringing new projects to priority economy areas, the financial market infrastructure development, and will give efficient and systematic support to the real economy. Financial market participants and investors will benefit from a private equity major projects participation platform, risks decreased owing to additional participants in project financing. As for the lenders, they will see an increased availability of project financing, increased length and volume of loans, lower project financing costs. At that, the government, de facto, is covering the risks of macroeconomic environment changes,” Ilya Torosov said.

“Government subsidies are hedging interest rate risks. The Project Financing Factory Programme encourages mutually beneficial cooperation among commercial banks in arranging financing for capital-intensive projects. All rouble-denominated tranches, including tranches from the partner banks, are government subsidised for the entire length of the loan in respect of fluctuations in the key interest rate of Russia’s Central Bank ,” Nikolay Tsekhomsky said.

Russia provided SPFC PFF with a 294 billion roubles government guarantee to back the bond issues. VEB.RF implemented a unified information system to share data and monitor PFF’s projects. The PFF’s initial stage counts three investment projects with the total cost of more than 212 billion roubles. VEB.RF is reviewing 11 potential projects for the Factory with the overall cost of more than 800 billion roubles.

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VEB.RF, Gazprombank, Sberbank, and Baikal Mining Company Sign Syndicated Loan Agreement to Develop Udokan Copper Deposit

12 july 2019 года
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VEB.RF, Gazprombank, and Sberbank signed with the Baikal Mining Company (BMC) a syndicated loan agreement to develop the Udokan copper deposit. BMC is a member of USM, a diversified international holding company founded by Alisher Usmanov who is also its principal shareholder.

“The deal is Russia’s largest project implemented using the Project Financing Factory mechanism with VEB.RF acting as the project operator. All rouble-denominated tranches, including tranches from the partner banks, are government subsidised for the entire length of the loan in respect of fluctuations in the key interest rate. To cover interest expenses at the investment stage and any expenses associated with the project cost overrun, VEB.RF provides the Factory’s special instrument, Tranche B, as an additional liquidity cushion,” VEB.RF’s First Deputy Chairman - Member of the Management Board Nikolay Tsekhomsky said.

The total project budget approximates to USD2.9 billion with USD1.79 billion to be raised as a loan from a syndicate of banks for the maximum term of twelve years. However, the shareholders’ own investments in financing the license acquisition, R&D, project design, and early construction works have exceeded USD870 million.

After becoming fully functional, the Udocan mining and smelting facility will create more than 2,000 new industrial jobs aside from allied sectors, and generate over RUB750 billion in additional tax proceeds to the budgets at all levels during the first 25 years of operation.

Acting as the arranger, financial advisor and a lender providing up to USD650 million, Gazprom also expects to raise external foreign financing. Other participants in the syndicate include Sberbank (up to USD650 million) and VEB.RF (up to USD490 million), with the latter exercising powers of the lending manager.  

Valery Kazikayev, Chairman of BMC’s Board of Directors said: “It was our initial plan to use the project financing mechanism. We raise funds to ensure a full operation cycle: delivery of primary equipment for a mining and processing facility, a leaching plant, building and installation work including that related to the infrastructure construction, and delivery of ancillary equipment and transport.”

Construction on the industrial site has been underway since the first quarter of 2019. Delivery and installation of the primary equipment are scheduled to begin in the middle of 2019, whereas the Udokan mining and smelting facility is expected to become fully operational in 2022.  

“Through the concerted efforts of the project lenders and initiators we were able to find an optimal investment solution and to structure financing so that to make a high credit quality deal. In particular, the Factory’s financial instruments allow to obtain a subsidised interest rate and thus to hedge the project company against any increases in the Bank of Russia’s key rate for the entire length of the loan,” Deputy Chairman of Gazprombank’s Management Board Alexey Belous said.

“This project is of strategic importance for both the industry and the national economy in general. Undoubtedly, it will considerably help to improve efficiency of the Russian mining industry, create new jobs and develop state-of-the-art infrastructure. We are glad to have been able to participate in this important project, which is unique for the Russian market and, together with our partners, to offer a tailored financial solution in the customer’s best interest,” Deputy Chairman of Sberbank’s Executive Board Anatoly Popov said.

Located in Zabaykalsky Krai, Udokan is Russia’s largest undeveloped copper deposit and one of the largest in the world. Its development includes the construction of Phase 1 of a mining and smelting facility to produce cathode copper and copper concentrate, an open-cut mine with the annual production of 12 million tonnes of ore, and the respective infrastructure.

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ACRA Affirms AAA(RU) Rating for VEB.RF and Bond Issues with Stable Outlook

12 july 2019 года
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Analytical Credit Rating Agency affirmed the credit rating of State Development Corporation “VEB.RF” at AAA(RU) with a stable outlook. According to the ACRA methodology, the credit ratings of VEB.RF’s bond issues (RU000A100GY1, RU000A100BM7, RU000A1004U0, RU000A1003W8, RU000A1001V4, RU000A0ZZZP3, RU000A0JXU48, RU000A0JXU71, RU000A0ZYLH3,  RU000A0ZYLJ9) are equivalent to that of VEB.RF, i.e. AAA(RU).

ACRA’s press release says that the credit rating of VEB.RF is assigned at the level equivalent to financial obligations of the Russian government “based on a very high probability of the extraordinary support from the government due to its high systemic importance for the Russian economy and essential state influence on VEB.RF’s creditworthiness.”

ACRA’s analysts point out that VEB.RF is not a commercial bank and engages in national projects. VEB.RF is a development institution operating with a unique legal mandate for the financing of strategic investment projects that cannot be delivered by commercial banks due to high risks and regulatory factors. VEB.RF has a considerable scale of operations in the Russian economy with its assets accounting for around 20% of the federal budget expenditures in 2018. ACRA believes that currently VEB.RF’s functions cannot be transferred to other state or private organisations.

Furthermore, ACRA recognises the stabilisation of VEB.RF’s financial results and gradual improvement of its debt profile. Given the budgeted financing, a high probability of additional financial backing from the government, and the financial institution’s own resources, ACRA believes that VEB.RF will have no problems with honouring its obligations unless there are serious external shocks.

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Short-Term Exchange-Traded Bonds Issued by VEB.RF

12 july 2019 года
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VEB.RF issued short-term bonds in additional placements to companies and corporations on 10, 11 and 12 July 2019.

The Bank raised 12 billion roubles, including 10 billion roubles from bonds with a maturity of 14 days and a coupon of 7.28% p.a., 1 billion roubles from bonds with a maturity of 21 days and a coupon of 7.27% p.a., and 1 billion roubles from bonds with a maturity of 28 days and a coupon of 7.27% p.a.

The par value of one bond is 1,000 roubles. The bonds were sold at 100% of their par value. The coupon is payable at maturity.

The arranger of the bond issue is Gazprombank.

The bonds are on the Moscow Exchange’s Quotation List Level 1. The depository is National Settlement Depository.

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