The government expanded the action of the infrastructure bonds program – by easing the requirements for the maximum level of the debt burden of regions wishing to take part in such projects. Now, territories with a level of debt to income from 50% to 75% (previously up to 50%) will be able to connect to the program. This will increase the number of its participants from 50 to 70 constituent entities of the Russian Federation. It was also found that public-private partnership projects can be financed from infrastructure bonds. Experts believe that this will help increase their number in the field.
The new mechanism for financing construction with the help of infrastructure bonds will be able to use one and a half times more regions than originally expected. We remind that in the next four years it is planned to attract about 150 billion rubles due to bonds placed under the guarantee of Dom.RF. These funds will be directed to developers in the form of soft loans guaranteed by the regions at a rate of 4%. They can be spent on housing infrastructure and urban infrastructure. To begin with, the mechanism will be tested in six pilot regions.
The rules approved at the end of the year assumed that in order to participate in the program, the level of the region’s debt should not exceed 50% of its income – no more than 50 out of 85 territories corresponded to the norm. Now the government has softened it by its decree – the debt burden should not exceed 75%.
As Alfiya Vasilyeva, Head of Project Finance at ACRA, explains, at the end of 2020, 46 regions had a debt load below 50%, 23 – from 50% to 75%. Dom.RF has similar estimates – according to its director for infrastructure bonds, Anton Nikitin, we are now talking about about 70 territories. According to him, regions with modest growth rates in construction and housing commissioning are among the new ones. At the same time, the 75% limit allows the center to maintain control over the increase in the subjects’ debt burden.
The selection of projects in such constituent entities of the Russian Federation, apparently, will be tougher – the decision will be made at the level of not an interdepartmental, but a government commission for regional development. In addition, Tatyana Karavaeva, Vice President of the Center for Strategic Research, draws attention to the fact that if the share of subsidies from the federal budget for the last two of the last three years was more than 40% of the region’s own revenues, then, despite the “suitable” level of debt, the territory does not meet the conditions of the program. will be. According to her, such regions are Altai, Dagestan, Ingushetia, Tuva, Chechnya and Kamchatka Territory.
Also, the decree extends the program to PPP and concessions with a project implementation period from three to 30 years and an investor’s share of own funds of at least 20% of the project cost. Anton Nikitin explains that for Dom.RF it is important to apply this mechanism “in absolutely all regions – it opens access to concessional financing, regardless of the level of public debt and without the provision of state guarantees.” As Tatyana Karavaeva notes, concessions are widespread in the regions – they are used in 81 out of 85 entities, while PPP agreements, on the contrary, are few in number (only 25 at all levels).
Anna Batueva, Managing Director for Legal Affairs of the National PPP Center (part of the VEB.RF group), believes that thanks to the bonds, the regions will be able to implement more projects – to a large extent, the increase will be achieved through the extension of the program to PPP projects, including concessions. The expert explains that these mechanisms can be more effective for the regions – the authorities “get more mechanisms to influence the order of implementation of projects.” Alfiya Vasilyeva notes that although the regions provide large amounts of contingent liabilities when implementing projects on PPP principles, entities with a low credit rating on their own did not have the opportunity to significantly improve the credit quality of the projects they support. “Participation in the program“ Dom.RF ”as a third supporting party allows us to solve this problem and obtain financing on favorable terms,” she explains.