S&P rates Russian Railways bond BBB/ruAAA

Standard & Poor's said it assigned a BBB long-term senior unsecured debt rating and ruAAA Russia national scale rating to the RUR 15 billion series 15senior unsecured bond due June 20, 2016 issued by Russian Railways (JSC) (BBB/negative; Russia national scale rating ruAAA).

Proceeds will be used for financing the company's infrastructure projects.

Ratings reflect the likelihood of timely and sufficient extraordinary government support, the agency said.

Ratings also reflect the company's monopoly status as national railroad infrastructure owner and operator, the strong competitiveness of railroads in Russia and the company's domination of the national railroad market, the agency noted.

These strengths are offset by the company's exposure to the Russian commodity-based and export-oriented economy, lower profitability and cash flow generation as a result of decreasing freight traffic, and high funding requirements, S&P said.

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