Press Releases

The Chuvash Republic Issues a RUR 1 Billion Bond Enhanced by IFC’s Partial Credit Guarantee

IFC Moscow        
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Tel.: 7 (495) 411 7555 (ext. 2026),


MOSCOW/CHEBOXARY, June 07, 2006 – Yesterday, the Chuvash Republic issued a five year RUR 1.0 billion bond in the Russian capital market with a partial credit guarantee provided by the International Finance Corporation (IFC) through its Municipal Fund Department. The Chuvash Republic will use the proceeds of the bond to finance capital expenditure program for 2006, in particular, investments in water supply and road construction.    

Edward Nassim, IFC’s director for Central & Eastern Europe, said, “IFC is pleased to support the Chuvash Republic’s effort to improve its ability to tap the local capital markets for long-term funding needed for basic infrastructure improvement, essential to making the Republic more attractive to private investors, developing industry, and improving the living standards of the population.”

The Chuvash bond is the first sub-national bond in Russia issued with a guarantee from a third party.  The amount of IFC’s guarantee is equivalent to 23% of the outstanding principal of the bond (RUR230 million) and is payable to the bondholders in the event that the Chuvash Republic is unable to pay either interest or principal. As a AAA-rated institution, IFC’s credit enhancement increased the investment rating of the Chuvash bond one notch to Ba2 on an international scale by Moody’s and by Moody’s Interfax.  The coupon on the bond was 7.85%.

Mr. Nicolai Smirnov, Finance Minister of the Chuvash Republic, said “The Chuvash Republic sees this latest bond issue enhanced by IFC’s partial credit guarantee as one more example of the region’s innovative solutions that help ensure the Republic’s continued economic development.  The World Bank Group’s involvement has been instrumental in developing this innovative product.

This project displays the continued effort of the World Bank Group to provide assistance to the Russian Federation in supporting the process of decentralization of fiscal responsibility to regional and local governments.  Kristalina Georgieva, Country Director for the World Bank in the Russian Federation, said “The Chuvash Republic has an exemplary history of involvement with the World Bank and we are pleased to be a part of this project.”

Additional Information

The Chuvash Republic, located approximately 650km east of Moscow, has a population of 1.3 million people and a Gross Regional Product of RUR60.75 billion (US$2.1 billion).  Although per capita income is about half of the Russian average, the Chuvash Republic is regarded as one of the more progressive and better performing regional governments, having been one of the first regions to receive funding in 2002 from the World Bank’s Fiscal Federalism and Regional Fiscal Reform Loan.

Since 2001 the Russian Federation has implemented a series of intergovernmental fiscal reforms, which resulted in new laws that better defined the distribution of responsibilities among the Federal, regional and local levels of government.  These reforms have led to the adoption of more uniform rules for revenue sharing and expenditure responsibilities for the regions and have created more certainty in budget revenues and expenditures that have contributed to the growth of a sub-national government bond market in Russia.

About IFC

International Finance Corporation ( is the private sector arm of the World Bank Group and is headquartered in Washington, D.C.  IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent.  Its 178 member countries provide its share capital and collectively determine its policies.

The mission of IFC is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. For more information, visit

About the Municipal Fund

In 2003, IFC established a new department, the Municipal Fund, which provides financing to well-run sub-national entities (local and provincial governments and public utilities) without requiring sovereign guarantees.  This initiative, carried out in close cooperation with the World Bank, responds to a growing market demand as many countries have decentralized the provision of essential infrastructure. For more information, visit