Russia could be in default after ruble payment Business

A key credit rating agency said Russia could be in default after trying to pay off its ruble debt.

Moscow made a payment due April 4 on two government bonds maturing in 2022 and 2042 in its own currency rather than in US dollars stipulated by the terms of the bonds.

Moody’s said Russia “can therefore be considered a default under Moody’s definition if not corrected by May 4, which is the end of the grace period. The bond contracts do not provide for any repayment in a currency other than the dollar”.

Moody’s said that while some Russian Eurobonds issued after 2018 allow payments in rubles under certain conditions, those issued before 2018 – such as those maturing in 2022 and 2042 – do not.

“Moody’s view is that the investors did not obtain the contractual foreign currency promise by the payment due date.”

If Moscow is declared to be in default, it would mark Russia’s first major default on foreign bonds since the years following the 1917 Bolshevik Revolution, although the Kremlin says the West is forcing a default by imposing crippling sanctions.

The Russian Finance Ministry did not respond to a request for comment. Finance Minister Anton Siluanov told the Izvestia newspaper earlier this month that if Russia is forced into a default, it will take legal action.

Prior to Mr. Putin’s invasion of Ukraine, Russia was categorized as investment grade. But its sovereign bonds have become a target in what the Kremlin calls US-led economic warfare.

In 1998, Russia defaulted on $40 billion in domestic debt and devalued the ruble under President Boris Yeltsin because it was effectively bankrupt after the Asian debt crisis and falling oil prices rattled confidence in its short-term ruble debt.

In 1918, Bolshevik revolutionaries under Vladimir Lenin repudiated Tsarist debt, shocking global debt markets because Russia then had one of the largest foreign debts in the world.

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This notice was published: 2022-04-15 10:20:40

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