Russian President Vladimir Putin spoke at a meeting with business representatives in the Kremlin in Moscow, Russia, on February 24, 2022.
Aleksey Nikolskyi | Sputnik | Via Reuters
Russia seems to have avoided historic defaults as it claims to have fulfilled significant interest payments on $ 2 Eurobonds.
The Russian Treasury said Friday that payment agent City’s London branch received a total of $ 117 million in payments. US banks are responsible for processing payments on behalf of bondholders.
It was unclear whether Russia was able to meet its external debt following the barrage of economic sanctions. Ukrainian invasion..
Measures imposed by the United States and its international allies have sought to block most of Russia’s gold and foreign exchange reserves and separate Moscow from the global financial system.
The Kremlin had to pay $ 117 million interest on the two Sovereign Eurobonds until Wednesday’s closing.Failure to make these payments may have paved the way for Russia First foreign currency default Over a century.
Holders of the two Russian dollar bonds said the coupon payments arrived Thursday one day later than expected, according to The Wall Street Journal. reportCiting investors and traders, but under bond terms, the funds were well received within the 30-day grace period.
Kremlin spokesman Dmitry Peskov said Thursday, defaulting to “Purely artificial“Russia had the money it needed to meet its external debt.
Russia seems to have been able to fully fulfill its coupon payment obligations on this occasion, but Moscow’s willingness and ability to repay its external debt may be tested again.
This is because the exemptions currently granted under US sanctions are expected to expire in late May, which could further complicate Russia’s ability to repay its external debt.
Economists have lost access to much of Russia’s central bank’s foreign exchange reserves, and the Russian Treasury has taken action in light of the central bank’s targeted measures that have prompted numerous credit downgrades from major global rating agencies. I wasn’t sure how to work on the payment.
JPMorgan ChaseThe Central Bank of Russia, the largest US bank in terms of assets, was asked to process a $ 117 million coupon payment for sovereign debt. The payment was sent to London’s payment agent City after consultation with the US Treasury.
A U.S. Treasury spokesperson declined to comment when contacted by CNBC on Friday morning.
JPMorgan Chase and Citi also declined to comment.
As a payment agent for foreign bondholders in Russia, Citi was responsible for receiving and processing payments to securities holders on behalf of the issuer. Disclosure of confidential or financial information is generally not permitted.
TimAsh, senior emerging market sovereign strategist at BlueBay Asset Management, described the payment as a “ridiculous move” by the Office of Foreign Assets Control, US Treasury.
OFAC manages and enforces economic sanctions for the purposes of US foreign policy.
“OFAC has bailed out Western bondholders who should be better aware, and its actions are working against Western security interests, effectively taking money from potential Ukrainian compensation funds. “I have received,” Ash said in an email on Friday, saying that the Russians are “the biggest beneficiaries” of the payment for this bond.
The US Treasury has previously stated that sanctions enforced against Russia will not prevent Russia from successfully paying its external debt until at least May 25.
Thursday’s credit rating agency S & P downgraded Russia’s foreign and local currency sovereign credit ratings from “CCC” to “CC” because of its “high vulnerability” to the Kremlin’s debt delinquency.
“The government is still trying to send payments to bondholders, according to an official statement from the Russian Treasury, but debt repayment of Russian Eurobonds to be paid within the next few weeks could face similar technical difficulties. It’s possible, “credit rating agency S & P said Thursday.
St. Basil’s Cathedral and the Kremlin Tower can be seen on the Red Square in Moscow.
Sopa Images | Light Rocket | Getty Images
S & P said that if Moscow fails to meet its external debt in the coming weeks, it could further lower the credit rating of Russian foreign issuers to “SD”.
He added that the expiration of OFAC’s payment license scheduled for May 25 could adversely affect Russia’s ability to repay its debt after that date.