Russian Railways adds 12.5 bln rbls to seven-year Eurobond

MOSCOW, Oct 10 (Reuters) - Russian Railways continued itsdrive to raise 100 billion roubles ($3.2 billion) of investmentcapital this year by adding 12.5 billion roubles to itsoutstanding seven-year Eurobond issue, one of the deal'sarrangers told Reuters on Wednesday.

The latest fundraising move, with a yield set at 8 percent,follows this week's addition of $400 million to its outstandingten-year issue, with a 4.05 percent yield. The original issue inMarch was for $1 billion with a 5.7 percent yield.

The state railways monopoly, also known as RZhD, raised 25billion roubles from a March sale of a rouble-denominatedseven-year Eurobond with an 8.3 percent yield.

Andrey Solovyov, global head of debt capital markets at VTBCapital, told Reuters that the timing was right for this week'stransactions, with the rouble deal seeing demand of more than 16billion roubles.

"Investor interest was big from all over the world,including the United States," he said.

Alongside VTB Capital, J.P. Morgan and Royal Bank ofScotland arranged both deals.

Russian Railways declined to comment on how it intends touse the money.

Last month French automaker Peugeot Citroen saidit was in exclusive talks with Russian Railways to sell a 75percent stake in its Gefco logistics division for 800 millioneuros ($1 billion).

Sources told Reuters last week that the bulk of funding forthe deal is likely to come from VTB's loan.($1=31.1605 Russian roubles)($1 = 0.7754 euros)

(Reporting by Katya Golubkova; Additional reporting by GlebStolyarov; Editing by Megan Davies and David Goodman)

((ekaterina.golubkova@thomsonreuters.com)(+7 495 775 1242))