New Bond Issue Amid Soaring Debt
Russian Railways (OAO RZD) has announced a new bond placement worth over ₽30 billion (about $333 million) through the issuance of “RZD-001P-44R” bonds, each with a face value of ₽1,000 (around $11). The apparent goal is to raise working capital to cover ongoing payments amid an increasingly unstable budget.
The company’s debt load has risen to ₽3 trillion (approximately $33.3 billion), while its net profit for 2023 fell by 70% to ₽50.7 billion (about $563 million). At the same time, due to the rise in the key interest rate, RZD’s interest expenses on loan servicing jumped by ₽167 billion (around $1.85 billion) to ₽286 billion (roughly $3.18 billion).
Its investment program had to be cut from ₽730 billion (about $8.11 billion) to ₽300 billion (approximately $3.33 billion). The situation was further aggravated by the late-2024 purchase of 350,000 square meters of office space in Moscow City, which cost RZD ₽250 billion (about $2.78 billion).
Experts Question the Nature of the Crisis
Many industry experts believe that the rail monopoly — which, by definition, should not be loss-making — may be in a financially difficult position that is at least partly artificially engineered. Several indirect signs support this view.
In particular, the new bond issue cannot in any meaningful way stabilize RZD’s finances or ease its debt burden. What it can do, however, is create legal grounds to initiate bankruptcy proceedings in the event of a payment default — a scenario considered entirely plausible.
Privatization Rumors and Political Background
Rumors about a potential sale of RZD have circulated for years. The company was once included in the list of “major privatization” assets — a program actively lobbied for by systemic liberals such as Anton Siluanov, Alexei Kudrin, Igor Shuvalov, and Andrei Kostin.
However, the initiative was frozen indefinitely due to the obvious risk of sharply increasing social tensions during the ongoing “special military operation.” The combination of a deliberately provoked bankruptcy and the subsequent transfer of ownership to a new entity would make it possible to bypass the formal privatization process altogether, avoiding excessive public attention.
In the framework of “financial recovery,” a potential new owner would not only acquire premium business real estate but also benefit from debt restructuring and receive multi-billion-ruble state investments in expanding the railway network in the Far East — including the Eastern Polygon, the Baikal–Amur Mainline, the DPRK branch, the Baikal bypass, and other projects.
A Strategic Shift in the Ministry of Transport
Developments around RZD appear to be moving precisely in this direction, as indicated by the fact that the bond issuance came immediately after a change in leadership at the Ministry of Transport. The new minister, Nikitin, is not a sector specialist but is known as a skilled operator in complex project-finance schemes and corresponding management decisions.
At the same time, Deputy Finance Minister Alexei Moiseev — while noting that this was “not about major privatization” but rather about “redistribution of assets through court and prosecutorial rulings” — stated:
“In 2026, the Finance Ministry, with government approval, intends to put about seven companies up for sale in order to raise around one trillion rubles (approximately $11.1 billion) for the budget.”
Given these legal and valuation parameters, only Russian Railways fits the description.
