Russian state-owned bank VEB is taking the corporate risk for an export credit agency-guaranteed HSBC loan to a Russian meat group.

The Byansk Meat Company is borrowing around US$40mn from VEB, which itself is getting the funds to lend from HSBC.

Byansk Meat will then use the on-lent funds to purchase breeding cattle from Australian suppliers.

The Australian export credit agency EFIC is providing a US$39.7mn export finance guarantee to support the contracts.

VEB brought in assistance from HSBC and EFIC because commercial appetite for agribusiness projects with tenors above five years is limited.

“We sought a longer tenor to reflect the term of the contract,” says Petr Fradkov, deputy chairman of VEB.

“EFIC’s export finance guarantee to HSBC enabled us to provide a loan to Bryansk for the term that it required.”

The deal comes at a time when Byansk Meat is looking to substantially increase its livestock count.

“In the past, Russia has imported most of its breeding cattle,” says Victor Linnik, president of Byansk Meat parent company, agribusiness firm Miratorg.

“Yet the climate and availability of open range land in the Byansk area is perfect for raising cattle. With EFIC’s support, Australia will make a significant contribution to our target of holding over 18,000 head of breeding cattle distributed across seven farms by the end of this year.”