7 July 2020
Egorov Puginsky Afanasiev & Partners advises on Russia’s first of its kind refinancing of a PPP project by way of placement of social bonds

On 30 June 2020, the unique refinancing of a public-private partnership project through placing of secured social bonds worth over RUB 5.6 bn was successfully closed. As part of the project, VIS Group built 12 social infrastructure facilities in Yakutsk. Egorov Puginsky Afanasiev & Partners’ team contributed to the project.

In 2015 a VIS Group’s entity entered into a public-private partnership agreement for construction of schools, kindergartens, a library and a contemporary art and culture center in Yakutsk as the private partner. Sakha (Yakutia) Republic and Yakutsk City jointly acted as the public partner.

The refinancing was carried out through the issuance of bonds by a Russian SPV “SFO for Social Development”, secured by the public partner’s liquidity under the PPP agreement. Three tranches of bonds with varied priorities had been placed; Expert RA rated the senior-tranche bonds as ruA.sf, and the mezzanine-tranche bonds as ruBBB+.sf. 

The project was independently assessed for compliance with the Social Bond Principles (SBP) of the International Capital Market Association (ICMA). The senior- and mezzanine-tranche bonds are the first ones in Russia to have been qualified by the Moscow Exchange as social bonds of the Sustainable Development Sector. Proceeds from the placement of bonds have been used to refinance the project, which provided for the build of the social infrastructure facilities.

The refinancing was arranged by BKS, Otkritie Bank, DOM.RF Bank and Sovcombank.

Partner Dmitriy Glazounov, Head of the Banking & Finance and Capital Markets Practice and a group of lawyers headed by Senior Associate Vladimir Goglachev worked on the matter.