Moody’s declares Russia to be in default

28 June, 11:48 AM
The Kremlin regime wanted to pay off debts in rubles (Photo:REUTERS/Dado Ruvic)

The Kremlin regime wanted to pay off debts in rubles (Photo:REUTERS/Dado Ruvic)

Russia has defaulted on its sovereign debt, after failing to make $100 million in payments on its eurobonds, Ukrainian business news outlet Ekonomichna Pravda reported on June 27, citing U.S. credit ratings agency Moody’s.

Creditors did not receive due payments after a 30-day grace period for the late payment of the bonds had elapsed, prompting the agency to classify this as a default.

While Russian dictator Vladimir Putin issued a decree on June 22 mandating all future Russian sovereign debts be paid in rubles. Moody’s said that would still “be considered defaulting on bonds, which don’t allow for payments in rubles.”

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Pre-2018 Russian eurobonds don’t have such an option, as neither did Russia using rubles to make a partial sovereign debt redemption in late March.

Bloomberg reported that Russia has defaulted on its sovereign, foreign currency-denominated debt for the first time since 1918. Despite having enough cash reserves to make the payments, Western financial sanctions prevent Moscow from actually executing the necessary transfers.

Nevertheless, the Russian Finance Ministry continued to look for ways to make interest payments on its eurobonds in U.S. dollars and euros, after a scheme to substitute them for rubles failed.

The U.S. administration on May 25 revoked the Russian Finance Ministry's license to conduct any actions involving bonds on the U.S. financial markets, including payments to creditors.

June 26 was the deadline for Moscow to make interest payments worth around $100 million on its sovereign debt.

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