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. Last Updated: 07/27/2016

Ust-Luga Will Issue State-Backed Bonds

Ust-Luga, which is building a Baltic Sea port under the same name, is seeking to issue state-backed bonds worth 20 billion rubles ($685 million), a company official said Thursday.

The issue would fall under the government’s infrastructure bond scheme, for which it had set aside 75 billion rubles in guarantees this year and another 100 billion rubles in 2010.

“The company would use the proceeds to construct the port,” Tatyana Pauk from Ust-Luga said. She said Ust-Luga plans to issue bonds with a maturity from seven years to 10 years and the issue will be organized by VTB, KIT Finance and Troika Dialog.

The company did not specify the date of the placement, but said it had already sent preliminary application for guarantees to the Finance Ministry.

Deputy Finance Minister Alexander Novak said earlier that steel producer Mechel, St. Petersburg’s Pulkovo Airport and Ust-Luga may become the first companies to issue infrastructure bonds. The state will provide guarantees for such bonds on the condition that the issuer has found financing for at least 50 percent of the project’s cost from alternative sources.

Ust-Luga, located near St. Petersburg, will become one of the world’s largest rail-based export terminals for oil products, able to handle almost one-fifth of Russia’s total petroleum products exports.