Dmitry Baranov, senior expert of Finam Management IC

– Rosatom’s decision to issue bonds through its subsidiary, Atomenergoprom, will help to attract funds for development of nuclear industry

State Atomic Energy Corporation Rosatom is planning to conduct a large loan over its affiliate JSC Atomenergoprom (the company unites civil nuclear enterprises).

Rosatom’s decision to issue bonds through its subsidiary, Atomenergoprom, will help to attract funds for the development of nuclear industry. Under present economic conditions, bonded loan appears to be the most effective instrument for attracting necessary funds. Bonds have lower interest rates than credits have. Besides, the duration of the loan is quite suitable for NPP construction projects. This loan is a valuable instrument for attracting investments in long-term projects. Since the bonds are guaranteed by Rosatom, one of the most efficient state corporations in Russia, we can expect that their interest rate will be as low as possible in the present situation.

One more factor that may keep the interest low is the federal target program for nuclear energy development in Russia. This program is divided into specific stages and has clear deadlines. This will make it much easier for potential investors to assess their risks and to calculate when they may expect to get their money back. The attracted money will be spent on financing of the investment projects of Rosatom’s companies, i.e. this money will go into the economy and will give national companies contracts, their personnel — jobs and wages and their regions — tax revenues. This is a very big contribution to the protection of the real sector and the whole Russian economy from the crisis.

As on the terms of loan placement 10 documentary interest-bearing inconvertible bond series are planned for emission whereas each bond will be 1,000 RUR. The bond’s maturity is five years. The bonds will be placed during a year starting from the state registration of issue.

The bonds will be placed by public subscription by means of purchase and sales transactions at tenders held by CJSC MICEX. ROSATOM is securing all the bond emissions.

Part of the attracted funds is planned be channeled to refund short-term loans attracted by the industry’s enterprises. Another trend is financing part of investment program for subsidiaries and affiliates in 2009 – 2010. In particular among the fund receivers are JSC Energoatom Concern (implementation of NPPs construction program), JSC TVEL (modernization and renewal of nuclear fuel production), ARMZ Uranium Holding (development of mining assets in Russia and abroad within the set up joint ventures), JSC TENEX and JSC United Company Enrichment Sublimation Complex (modernization and renewal of production facilities with the shift to a new generation of gas centrifuges), and JSC Atomenergomash (investments into nuclear engineering for implementation of the NPPs’ new units commissioning program).

JSC Atomenergoprom provides full production cycle in nuclear power industry consolidating leading enterprises and organizations of the industry (its history is over 60 years) and the experience accumulated over the whole range of NFC and NPP building technologies (at present the issuer’s consolidation perimeter incorporates the largest enterprises of nuclear energy industry namely: Atomredmetzoloto, TENEX, TVEL, Energoatom Concern, separation and sublimate complex enterprises as well as enterprises of engineering and service, development of new technologies, etc). According to the consolidated reporting of the company, the issuer’s revenue in 2008 (disregarding the joining date of subsidiaries and affiliates) was 290.5 bn. RUR, the revenue was 146.5 bn. RUR in the first half of 2009, and the profit was 14.4 bn. RUR.