Russia

Default in Russia on external debt, according to Bloomberg: what does late payment of coupons on eurobonds mean and what does it threaten

Bloomberg writes, what is default, but the Russian Ministry of Finance does not agree with this Sunday, 26 June, the 30-day grace period for the payment of coupons on Eurobonds of the Russian Ministry of Finance in the amount of about $100 million has expired. According to Bloomberg, failure to pay interest by the deadline means, that Russia defaulted on its foreign obligations for the first time since 1918. At the same time, Bloomberg emphasizes, that the default is mostly symbolic and means little to Russians — they are more affected by accelerated inflation and the economic downturn. Russian Ministry of Finance 27 June said, that Russia fulfilled its obligations on time. The money for payments was transferred to the National Settlement Depository in advance and then sent to the holders of Eurobonds. But international settlement and clearing systems did not bring the money to the final recipients. And since Russia cannot influence the actions of foreign financial intermediaries, investors should contact them. What happened 27 May, the Russian Ministry of Finance had to pay coupons on two Eurobonds in the amount of $71.25 million and EUR 26.5 million. But the payment of public debt in foreign currency has become impossible: 25 May the US decided not to renew the license, which allowed U.S. holders of Russian bonds to receive payments on these securities. And although the Russian Ministry of Finance sent money to NSD in advance, 20 May, — владельцы облигаций не получили их, indicates Bloomberg. По условиям облигационных выпусков дефолт объявляется, если купоны или номинал облигаций не были выплачены в 30-дневный срок с даты, when they should have been paid. 26 июня этот срок истек. В итоге подтвердились опасения насчет дефолта по внешнему долгу России, которые высказывались начиная с марта. As recalled by Bloomberg, это первый подобный дефолт с 1918 года, когда большевистское

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Russia's default on Eurobonds has not occurred: The Ministry of Finance paid in dollars, and investors began to receive payments

The Ministry of Finance of the Russian Federation still paid in dollars for two issues of sovereign bonds Investors, invested in Russian bonds, started receiving payments, writes Bloomberg. We are talking about payments on Eurobonds for 649.2 million dollars. 29 April, the Russian Ministry of Finance announced the payment of a coupon and redemption of the face value on bonds of issue No. 12840060V "Russia-2022" and the payment of a coupon on bonds No. 12840061V "Russia-2042" maturing in 2042. Payments were brought to the paying agent for these Eurobonds - London-based Citibank. Ministry of Finance stated, that he transferred the payment in US dollars, the currency of the bond issue. The grace period for these bond issues ended 4 May. According to Bloomberg, separated Russia from a technical default 11 hours — the payment of the Ministry of Finance of Russia was processed by clearing centers in Europe. Three investors spoke about the receipt of payments in their depository banks. How Russia was able to pay in the currency of Bloomberg told, that the Russian Ministry of Finance paid off from domestic dollar reserves due to the freezing of part of international reserves. Bank "Dom-rf" was involved in the payment, who was not subject to sanctions. First, the correspondent bank of Bank of New York Mellon received money from Russia, and then forwarded them to Citibank. The payment could not be made without the approval of the US Treasury. The Ministry of Finance was going to make payments on these Eurobonds in rubles 6 April Ministry of Finance told, that he transferred money to the holders of Eurobonds of issues No. 12840060V "Russia-2022" and No. 12840061V "Russia-2042" in rubles. The department then announced, that could not make a payment in dollars due to the fact that, that the foreign correspondent bank refused to execute payment orders. The Ministry of Finance transferred money to the National Settlement Depository in rubles at the rate of the Central Bank for 4 April and considered its obligations fulfilled. After that, the rating agency Fitch warned, that the payment of dollar bonds in rubles will mean default at the expiration of 30 days — …

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