May 20, 2020 / 12:18 PM / 8 days ago

Russia's VEB could buy $1.4 bln in Russian Railways perpetual bonds - draft resolution

MOSCOW, May 20 (Reuters) - Russia’s state development bank VEB could invest 100 billion roubles ($1.4 billion) from state pension funds into perpetual bonds to be issued by state-owned Russian Railways in a bid to cushion a fall in investment caused by the coronavirus, according to a draft resolution.

The draft resolution, prepared by the finance ministry, said that the share of Russian Railways bonds should not make up a share of more than 20% in VEB’s investment portfolio.

One of the country’s biggest employers, Russian Railways said earlier this month it could issue perpetual bonds worth 370 billion roubles to help it deal with the fallout of the coronavirus, which has infected more than 300,000 people in Russia as of Wednesday.

If adopted the draft resolution would be another example of Russian state entities supporting each other via cash deals.

VEB manages citizens’ state pensions on behalf of Russia’s Pension Fund and owns a stake in Blagosostoyanie, one of the country’s biggest pension funds not involved in managing state pensions.

The draft resolution, prepared by the finance ministry, said that the share of Russian Railways bonds should not make up a share of more than 20% in VEB’s investment portfolio.

Last month Russia’s Finance Ministry completed the purchase of a controlling stake in Sberbank, Russia’s largest lender, from the central bank for 2.14 trillion roubles ($28.31 billion). The proceeds from the deal have in part been used to fund Russia’s anti-crisis measures related to the coronavirus pandemic. ($1 = 71.6970 roubles) (Reporting by Darya Korsunskaya; Writing by Gabrielle Tétrault-Farber; Editing by Katya Golubkova)

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