EBRD, ADB anchor investors in Georgian Railway’s $500mn green bond

The Asian Development Bank (ADB) and European Bank for Reconstruction and Development (EBRD) have invested a combined $70mn in the 4% 2028 green bond issue released by Georgian Railway. It started trading on the main market of the London Stock Exchange on June 18.

The $50mn invested by the EBRD and the $20mn placed by the ADB are a boost for the $500mn bond issued by Georgian Railway, the first green bond issued by a Georgian state-owned company.

The proceeds from the issue will be used to roll over the 2022, 7.75% bond issued by the company back in 2012 to finance the improvement of railway lines and ongoing modernisation.

“We will pay $20mn per year instead of approximately $40mn so far, using these savings to develop the company,” said Georgian Railway’s CEO David Peradze

Fitch Ratings on June 16 assigned a final long-term rating of 'BB-' to the bond.

Global Capital announced on June 10 a benchmark offering range of 4.375%-4.5% for the 7-year issue.

Ekaterina Miroshnik, EBRD director and head of Infrastructure Eurasia, said that “this is a landmark deal for Georgian Railway and Georgia.” The EBRD plans to scale up its green finance in the region to support countries and businesses in their transition to net-zero emissions, she added.

"Georgia lies at the crossroads of Europe and Asia, and serves as an important trade and transport corridor," said Shantanu Chakraborti, ADB's director of infrastructure financing for South, Central and West Asia.

“The issuance of these green bonds will enable Georgian Railway to modernize its rail network, which is vital to the country’s economy, as well as to the region, to ensure faster and safer rail transport," Chakraborti added.

“ADB’s support for this bond issuance complements ongoing technical assistance to Georgian Railway to strengthen its planning for passenger services,” said ADB country director for Georgia Shane Rosenthal.

Davit Peradze, executive director of Georgian Railway, said: “The transaction received considerable interest from investors, helping Georgian Railway to access the capital market even during the current unprecedented times. "

He stressed that ADB has played a key role by acting as an anchor investor for the notes.

Georgian Railway is wholly owned by the Partnership Fund, Georgia’s state-owned investment fund. It provides freight services, transshipping a variety of cargo principally from the Caspian Sea and Central Asia in the east to the Black Sea in the west. It also provides domestic and international passenger services.