Bloomberg: Russia hours away from first default in 100 years

Bloomberg: Russia is hours away from its first default in 100 years

US media reported Russia's technical default on its foreign debt tomorrow, June 27

Russia is “within hours to a few hours of default,” and it will happen for the first time in 100 years, reports Bloomberg.

As the news agency explains, the delay grace period to pay interest on government bonds in the amount of approximately $100 million expires June 26.

If investors do not receive the required funds by Monday, then an “Event of Default” will be recorded and a Technical Default on External Debt will occur on June 27.

This event will occur for the first time in 100 years – the last time Russia defaulted on its external debt was in 2018.

However, under current circumstances, Russian authorities will not formally declare a default, the agency notes.

Recall that in April the United States banned servicing of Russia's foreign debt without renewing a license for holders of Russian sovereign bonds to receive payments. The license expired on May 25.

On May 27, the Ministry of Finance of the Russian Federation announced that the State Settlement Custodian, using frozen reserves, had paid two issues of; Dollar Eurobonds in the amount of $71.25 million and €26.5 million maturing in 2026 and 2036.

On May 30, Finance Minister Anton Siluanov announced that Russia would settle accounts with holders of Russian Eurobonds using a mechanism similar to Russia's ruble gas payment system.

Similar ruble payments were made on eurobond coupons maturing in 2027 and 2047.

At the same time, the head of the Ministry of Finance refused to consider the cessation of payments on the foreign currency foreign debt as a default, since this became impossible due to the sanctions imposed by the West.

Previously, Russian President Vladimir Putin signed a decree on the payment of foreign currency debt in rubles. To do this, ruble accounts of type “I” were opened for all foreign investors without their personal presence.

The next day the Ministry of Finance paid for the first time Eurobonds in rubles under the new scheme.


Leave a Reply

Your email address will not be published. Required fields are marked *