The Kremlin announced in May that it would repay the debt in rubles due to international sanctions and the agency admits the breach is symbolic for now
The international agency Bloomberg today assures that holders of Russian Eurobonds have not received payments due from two debt issuances: 26.5 million euros for euro-denominated bonds and $71.25 million for dollar-denominated securities. So, according to Bloomberg, this Sunday was “the first default since 1918.”
However, Russia’s finance ministry has previously announced that it will not be considered suspended, arguing that it transferred funds to the National Settlement Depository (NSD) on May 20. Today, there is still no official statement from the Russian authorities regarding the news released by Bloomberg.
The payments for external bonds due in 2026 and 2036 were supposed to be made by May 27, but investors have not received the money due to sanctions restrictions.
From then on, a 30-day grace period began, during which Russia had to make payments to avoid a formal default. However, this did not happen, Bloomberg writes. However, the agency acknowledges that “given the damage already done to the Russian economy and markets, the bankruptcy at this point is essentially symbolic and means little to Russians.”
Last Wednesday, President Vladimir Putin issued a decree establishing temporary procedures to meet foreign debt obligations in rubles, not in the currency in which the loans were made. The next day, Finance Minister Anton Siluanov accused the “counterparts” of “refusing to make payments in foreign currency, which is a force majeure situation for us” and creates conditions for an “artificial default”.
“Anyone familiar with the business knows that this is not a standard error. Frankly, this whole situation seems like a joke,” Siluanov emphasized. “As soon as an investor wants or can get his money, the equivalent in rubles is waiting for him,” he added.
Russia announced at the end of May that it would repay its foreign debt in rubles, as it was unable to do so in dollars due to sanctions. The problem is that repayment in a currency other than that in which the debt is established exposes the debtor to default on the payment of that debt.
Source: La Verdad
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