Russia Mechel places 5 bln roubles of bonds

MOSCOW, Oct 21 (Reuters) - Russian steel and coking coal producer Mechel (MTL.N) said on Wednesday it raised 5 billion roubles ($171 million) via a bond placement in order to fund part of the development of its Elga coal mine.

The bonds come due in 2018 and they have a quarterly coupon with a current interest rate of 12.5 percent per year.

"We hope ... financial institutions will regard the outcome as a price guidepost in respect of long-term unsecured debt of the company," chief financial officer Stanislav Ploschenko said in a statement.

Mechel acquired the Elga coal deposit via a government auction in 2007. It has about 2.2 billion tonnes of coking coal, meaning that it could become Russia's largest coal project.

VTB Capital (VTBR.MM), Gazprombank and Sberbank (SBER03.MM) acted as arrangers for the bond placement.

(Reporting by Alfred Kueppers; editing by Elaine Hardcastle)