The credit rating of the State Company “Russian Highways” (hereinafter, the Company) is on par with that of the Russian Federation, minus two notches, due to the very strong state influence. The state exercises absolute operational and financial control over the Company. The Company’s activities in asset management and highway construction and reconstruction are subsidized by the federal budget and other sources. The two-notch downward adjustment reflects low scores for the sub-factors Social Role and Economic Role and Reputational Risks.
KEY ASSESSMENT FACTORS
The degree of support is very high due to the high assessments of such sub-factors as Propensity for Providing Support, Barriers and Limitations, Exclusivity of Functions, Ownership, Control and Regulation, and Guarantees or Other Support Mechanisms. There are no legal or economic restrictions limiting the state’s ability to support the Company. The Company carries out exclusive functions and acts as a public project owner for design, construction, and operation of highways under its asset management. It was established by Federal Law No. 145-FZ dated July 17, 2009 “On the State Company ‘Russian Highways’” with the purpose of implementing a wide range of tasks. These include the following: construction and renovation of freeways and highways connecting large metropolitan agglomerations and ensuring main exits beyond the state border of the Russian Federation (including through the largest seaports); raising large-scale private investment and transitioning to a new contract system; improving living standards for Russia’s population through improved transport accessibility; improving road safety on Russian’s highways; increasing the competitiveness of Russian economic sectors in world markets by reducing the transport component in the final price of products. The state is the sole founder of the Company. The Company’s supervisory board, its top management body, includes representatives from various government departments. The Company’s business program until 2030 is approved by Directive of the Government of the Russian Federation No. 3597-r dated December 6, 2024.
The low scores for the sub-factors Social Role and Economic Role and Reputational Risks reflect the low social significance of the Company on the national scale and the insignificant financial consequences of the Company’s potential default for the transport and related industries. However, a potential default by the Company would be associated with large reputational risks for the state, which makes it very likely that budgetary funding for the Company’s obligations will be sufficient, including under concession agreements.
The high degree of dependence on homogeneous risk factors implies that the main sources of funds for the Company are the federal budget and state funds. Therefore, macroeconomic factors determining national budget revenues have a direct impact on the amount of road construction subsidies.
Comfortable funding structure and high liquidity indicators. The volume of outstanding bonds issued by the Company by December 31, 2024 was RUB 822 bln, of which about 81% (with a reduced coupon rate and a comfortable repayment schedule) was held by the National Welfare Fund, and the rest were market bond issues. Despite the absence of any direct government guarantees for the market bond issues and the fact that the state is not formally liable for the Company’s obligations (according to Federal Law No. 145-FZ), the Agency expects that, in accordance with the Company’s business program, most of the Company’s obligations under bonds will continue to be serviced using federal budget subsidies, as well as asset management income. ACRA also notes the Company’s high liquidity indicators: as of December 31, 2024, cash balances amounted to RUB 98 bln (of which RUB 48 bln were held with the Federal Treasury Department), which exceeds the Company’s short-term debt (RUB 67 bln excluding liabilities to the principal under trust management agreements).
KEY ASSUMPTIONS
-
Maintaining the current amount of federal budget subsidies in accordance with the development program approved for the Company;
-
Debt servicing at the expense of federal budget and asset management income.
POTENTIAL OUTLOOK OR RATING CHANGE FACTORS
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- Increase in the Company’s systemic importance for the state and significant expansion of its business lines.
A negative rating action may be prompted by:
- Substantial decline in the budget subsidies allocated for construction of highways, which may lead to a decrease in the Company’s systemic importance.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): none.
Support: State — on par with the Russian Federation minus two notches.
ISSUE RATINGS
Uncertificated exchange-traded interest-bearing bond issued by the State Company Russian Highways, series BO-002P-05 (RU000A1017H9), maturity date: December 12, 2029, issue volume: RUB 27,280,200,000 — AA(RU).
Uncertificated exchange-traded interest-bearing bond issued by the State Company Russian Highways, series BO-003P-01 (RU000A102H91), maturity date: December 9, 2025, issue volume: RUB 14,000,000,000 — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BО-004Р-01 (RU000A103NU9), maturity date: September 8, 2026, issue volume: RUB 5,000,000,000 — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BО-003Р-02 (RU000A104XR2), maturity date: July 1, 2027, issue volume: RUB 30,513,100,000 — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BО-003Р-03 (RU000A105V82), maturity date: February 12, 2026, issue volume: RUB 4,000,000,000— AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BO-004Р-04 (RU000A106C92), maturity date: May 30, 2028, issue volume: RUB 4,000,000,000 — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BO-005P-01 (RU000A106FR4), maturity date: June 25, 2026, issue volume: RUB 20,000,000,000 — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BO-005P-02 (RU000A106J20), maturity date: July 8, 2026, issue volume: RUB 20,000,000,000, — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BO-005P-03 (RU000A106R53), maturity date: August 12, 2026, issue volume: RUB 25,237,500,000 — AA(RU).
Uncertificated exchange-traded interest-bearing non-convertible bond subject to centralized title registration issued by the State Company Russian Highways, series BO-005P-04 (RU000A106XM8), maturity date: September 18, 2026, issue volume: RUB 2,000,000,000 — AA(RU).
Rationale. The bond issues are senior unsecured debt obligations of the State Company Russian Highways. Due to the absence of either structural or contractual subordination of the bonds, ACRA ranks them as equal to other existing and future unsecured and unsubordinated obligations of the Company. According to ACRA’s methodology, when using the simplified approach to assessment the credit ratings of the bonds are on par with the credit rating of the State Company Russian Highways.
REGULATORY DISCLOSURE
The credit ratings have been assigned to the State Company “Russian Highways” and the bond issues (RU000A1017H9, RU000A102H91, RU000A103NU9, RU000A104XR2, RU000A105V82, RU000A106C92, RU000A106FR4, RU000A106J20, RU000A106R53, RU000A106XM8) of the State Company “Russian Highways” under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings with External Support and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit ratings to the above issues.
The credit ratings of the State Company “Russian Highways” and the bond issues (RU000A1017H9, RU000A102H91, RU000A103NU9, RU000A104XR2, RU000A105V82, RU000A106C92, RU000A106FR4, RU000A106J20, RU000A106R53, RU000A106XM8) of the State Company “Russian Highways” were published by ACRA for the first time on June 2, 2017, December 24, 2019, December 16, 2020, September 13, 2021, July 7, 2022, February 16, 2023, October 30, 2023, June 29, 2023, October 30, 2023, October 30, 2023, and October 30, 2023, respectively. The credit rating of the State Company “Russian Highways” and its outlook, as well as the credit ratings of the bond issues (RU000A1017H9, RU000A102H91, RU000A103NU9, RU000A104XR2, RU000A105V82, RU000A106C92, RU000A106FR4, RU000A106J20, RU000A106R53, RU000A106XM8) of the State Company “Russian Highways”, are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by the State Company “Russian Highways”, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited and the State Company “Russian Highways” participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to the State Company “Russian Highways”. No conflicts of interest were discovered in the course of credit rating assignment.
