Despite the fact that the Kremlin has shown the will and claims to have the means to pay its debts, it cannot make the payments because foreign creditors do not accept their payments in rubles, in accordance with the sanctions imposed on Russia for the invasion of Ukraine.
Euskaraz irakurri: Errusia ordainketa-etenduran sartu da, eurotan eta dolarretan jarduteko ezintasunagatik
The week kicks off a new chapter in the global financial ecosystem as, according to the Bloomberg bureau, Russia has entered into suspension of payments for the first time in 100 years.
And it is that this Sunday has ended, the grace period for the payment of nearly $100 million corresponding to some bonds that Russia has been unable to execute because of the inability to work with dollars and euros, as a result of sanctions imposed by the European Union and the United States. The latter decided in May not to renew the permit that allowed Russia to temporarily pay its foreign debt in dollars.
Therefore, according to the US agency, “the debtor in suspension of payment (Russia) has the will and the means to pay, but cannot.”
Given the blockage of payment channels to foreign creditors. Russian President Vladimir Putin signed a decree last Wednesday, June 22, allowing the state to pay Russian liabilities to foreign holders of Russian government euro bonds in rubles.
The decree states that “the obligations to the Eurobonds of the Russian Federation are recognized as fulfilled if they are entered into in rubles for an amount equal to the value of the obligations in foreign currency”, using the exchange rate which is formed on the national foreign exchange market of Russia on the day on which the State makes the payment.
With the help of this decree, Russia has already made several Eurobond payments in rubles. The latter were a payment of two dollar-denominated coupons maturing in 2027 and 2047, and a third coupon, of a dollar-denominated eurobond maturing in 2028, for which the Russian state has transferred 8.5 billion rubles, the equivalent of $159.4 million, to the National Depositary, responsible for making the payment.
Putin explained that for the transfer to be effective, investors must open a special type “I” account with a Russian bank and then convert the interest payment received into another currency and withdraw it abroad.
Russian Finance Minister Anton Siluánov assured on Thursday that Russia’s payment arrangement in rubles does not mean default.
“No, she does not. The Russian Federation does not refuse to fulfill its obligations. And as a responsible borrower, it takes all possible measures to transfer the money to all investors. Foreign counterparties refuse payments in foreign currency (originating from Russia) ) to do), which for us is a case of force majeure,” he emphasized. “And for this reason alone, we are switching to ruble payments,” he added, according to the official TASS agency.
Payment in rubles would be contrary to the prospectus for the issuance of Eurobonds. According to Bloomberg, this situation is considered a case of suspension of payments, although, according to the agency, it is currently “quite symbolic in nature and is not a big deal for the Russians”.
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Source: EITB
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.
