Russian Railways in CHF 200 Million Green Perpetual LPNs Offering

Cleary Gottlieb represented Russian Railways JSC (Russian Railways) in a CHF 200 million offering by RZD Capital Plc (RZD) of green perpetual LPNs to be consolidated into a single series with the CHF 250 million green perpetual LPNs issued by RZD on March 23, 2021.

The offering priced on October 4, 2021, signed on October 5, 2021, and closed on October 7, 2021. Credit Suisse, Gazprombank, and VTB Capital acted as joint lead managers for the offering. The LPNs are to be listed on the SIX Swiss Exchange.

Russian Railways has a green finance framework in place that follows the principles specified in the 2018 edition of the voluntary guidelines for issuing green bonds and in the 2020 edition of the voluntary guidelines for green loans published by the executive committee of the green bond principles with the support of the International Capital Markets Association (ICMA) and the Climate Bonds Initiative (CBI) low carbon transportation standard. The framework has obtained a second party opinion dated May 2019, as amended in March 2021, to confirm the alignment with the key features of the green bond principles from Sustainalytics. Russian Railways has entered an agreement with CBI for climate bonds programmatic certification. The proceeds will be used for financing and/or refinancing the acquisition of electric locomotives and/or trains used for passenger transportation.

Due to a high demand from international investors for green assets and a successfully market strategy, RZD managed to achieve a yield of 3% at an issue price of 100.638, which is higher than the par value of the initially placed LPNs and, at the same time, lower than the coupon rate of the initial issue of 3.125%. Thus, it allowed to increase the effective rate of the entire issue to 3.0694%.