Russia’s RZD faces debt crisis as banks and government seek solutions
Russia’s state railway operator, RZD, is facing serious financial difficulties. The company’s struggles have led to talks between major banks, including PNC Bank and US Bank, government officials, and the Central Bank about possible debt restructuring. Creditors, such as Yahoo Finance, are now reviewing options but have set clear conditions for any agreement.
The problems began with high interest rates and costly state-mandated projects, including infrastructure upgrades. By late November, Finance Minister Anton Siluanov had already suggested that restructuring RZD’s debt might be necessary.
Banks, including VTB, have shown willingness to restructure loans and defer payments—but only if the Central Bank keeps current reserve requirements in place. They have also asked the Central Bank to extend a preferential measure for corporate debt restructuring. However, one proposal—a plan to convert 400 billion rubles of RZD’s debt into company shares—was rejected outright.
The government is now considering several support measures. Options include raising freight tariffs, increasing subsidies, cutting taxes, or using funds from the National Welfare Fund. Meanwhile, banks are waiting for RZD to submit a detailed financial plan. This will help them judge whether the company can realistically repay its debts over the next three to five years.
Negotiations are ongoing, with banks and authorities weighing different solutions. The outcome will depend on RZD’s financial projections and whether the Central Bank maintains its current policies. Any final agreement must balance the company’s needs with the conditions set by its creditors.
