FedGrid closes book on 10YR CPI-linked ruble bond

6 August 2012

Federal grid company successfully closes book for 10-year inflation-protected ruble bond issue

3 August 2012, Moscow - Federal Grid Company of the Unified Energy System ("Federal Grid Company" or "the Company") (MICEX-RTS, LSE: FEES), announces it has successfully closed the book for a 10-year, RUB 10 billion local bond issue with a CPI-linked coupon. 

Despite the challenging market environment, investors showed strong interest in the transaction.

The bonds saw considerable demand from a broad investor base, including banks and investment companies, as well as traditional buyers of inflation-protected debt instruments like asset management companies and pension funds.

This bond placement is a landmark transaction for the Russian securities market: it helps set new market standards for issuance of long-term bonds with CPI-linked coupons by first-class borrowers.

The first two coupons are set at 9% p.a., which provides a fixed level of income for the first year of the bond's tenor. The floating rate used for subsequent coupons (until the put option) will be calculated based on the consumer price index plus 2.5%. Settlements will take place on MICEX on 8 August 2012.

This bond placement by Federal Grid Company once again demonstrates that the RAB-based budgeting approach enables the Company to attract long-term investments for financing the development of Russia's unified national grid. This transaction also showcased the fact that the Russian debt market is capable of meeting domestic requirements for long-term infrastructure investments.

The Lead Arrangers of the bond issue were Gazprombank and Renaissance Capital. In July 2011, Federal Grid Company was the first company post-crisis to successfully issue a 10-year local ruble-denominated bond with a fixed coupon rate.

About Federal Grid Company

Federal Grid Company is the operator and manager of Russia's unified electricity transmission grid system, including high voltage transmission lines, and holds the status of a natural monopoly.

The Company's assets include over 124,000 km of transmission lines and 854 substations with over 322 GVA of 35-750 volt transformer capacity. Based on the length of transmission lines and installed transformer capacity, Federal Grid is the largest publicly traded electricity transmission company inthe world.

Federal Grid's business is to provide electricity transmission and technological connection services.It maintains and develops the grid system and supervises grid facilities and infrastructure in 73 regionsof Russia, covering a territory of 13.6 million square kilometers. Its customers are regional distribution companies, electricity suppliers and large industrial enterprises.

Since 1 January 2010, Federal Grid has operated under a 5-year regulatory asset base (RAB) model.

The Company was incorporated in June 2002 as part of reorganization of Russia's electrical power industry. The largest shareholder, with a 79.55% stake, is the Russian Federation Government.

Federal Grid Company's ordinary shares are listed on the MICEX-RTS stock exchange under the ticker FEES and the Company's GDRs are traded on the London Stock Exchange under the same FEES symbol. The Company's shares are included in the MSCI Emerging Markets and MSCI Russia indices.

In 2011 the Company's IFRS revenue for 2011 was RUB 139,571 million (up 23% compared to 2010), adjusted EBITDA as RUB 83,760 million (a 24% increase from 2010), and adjusted net profit was RUB 38,241 million (up 37% on 2010).

Further information can be found at www.federal-grid.com

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