Russia is approaching its first bankruptcy since the Bolshevik Revolution more than 100 years ago. After the 30-day payment and grace period expired on Sunday evening, several Taiwanese investors complained that they had not yet received the agreed-upon interest payments on their Russian government bonds, two people familiar with the matter told Reuters on Monday.
However, according to previous information from lawyers, it is unclear whether the deadline for the Moscow government to pay its creditors did not end on Sunday, but only at the end of the first working day after that.
Deadline to pay $100 million
A deadline passed Sunday to pay $100 million in interest on two foreign currency bonds — $29 million for a 2036 euro bond and $71 million for a 2026 dollar bond. Actually, Russia was supposed to make the payments on May 27, but that didn’t happen. A grace period of 30 days then started, which has now ended. Since the prospectus for the bonds does not specify an exact deadline, lawyers believe Russia may have until the end of Monday to pay its creditors.
Kremlin can’t transfer money to creditors due to sanctions
However, there are currently few signs of investors getting their money’s worth. Since the invasion of Ukraine on February 24, sweeping sanctions have excluded Russia from the global financial system. Since then, Moscow has struggled to pay off outstanding bonds totaling $40 billion, despite billions in foreign exchange reserves. The Kremlin has repeatedly stated that it sees no reason for default. Due to the sanctions, however, it is not possible to transfer money to the bondholders. The West is therefore accused of trying to force the country into artificial insolvency.
As for new short-term loans by Russia, a formal default would be largely symbolic, given that Moscow is currently unable to borrow internationally anyway, and thanks to its rich oil and gas revenues, it doesn’t have to. But the stigma would likely increase the cost of borrowing in the future — and for many years to come.
According to the Ministry of Finance in Moscow, Russia has made payments for the bonds in euros and dollars to its central securities depository, NSD. However, it is considered unlikely that the funds will find their way to the many international holders. For many bondholders, failing to transfer owed money to their accounts on a timely basis is a standard.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
