Russia defaults on foreign debt for the first time in more than a century, bondholders collect debt | Business newsletter
Russia is believed to have missed a payment deadline for its international bond investors, a scenario that would plunge the country into default for the first time since the Bolshevik Revolution of 1917.
According to Reuters news agency, some Taiwanese Eurobonds holders did not receive interest when the grace period expired on Sunday.
Moscow is expected to earn $100m (£81.4m) in payments on two Eurobonds – $29m on 2036 euro denomination bonds and $71m on par bond dollar price in 2026.
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It’s not clear how any of these defaults could have come about.
Russia’s finance ministry said it had made the payments in euros and dollars, adding that it had fulfilled its obligations.
However, last week it signaled that it was trying to meet its pending payment deadline through payment in rubles, blaming the impact of Western sanctions on its war in the Middle East. Ukraine.
They have seen hundreds of billions of dollars in its currency reserves abroad frozen.
The country’s banking system has also been cut off from large parts of the global market.
Bloomberg news agency quoted Russia’s Finance Minister as describing the default as a “farce”.
The Kremlin has repeatedly insisted that there are no grounds for Russia to default on its debt.
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It is unclear whether a ruble payment through Belgium-based Euroclear bank was blocked or Russia was declared insolvent by bondholders for the amount in the wrong currency.
However, a default was deemed inevitable when the US Treasury Department decided not to renew the waiver of sanctions rules that had allowed payments to foreign bondholders.
Jay S. Auslander, a leading sovereign debt attorney at Wilk Auslander in New York, says it can take a while to determine a debt.
“While there’s a chance that some magic could happen…no one’s betting that.
“It’s highly likely that they won’t be able to because no bank will transfer the money.”
While an official default is largely symbolic because the country cannot borrow internationally at the moment, the stigma could increase borrowing costs when Russia eventually returns to the bond market. promissory note.
It has $40 billion in international bonds outstanding, about half of which are held by foreign investors.
