Russia tried to pay in rubles for two dollar- denominated bonds maturing on This was reported on April 4 by the S&P agency. in the note on Friday. The agency said this amounted to a “selective default” as investors are unlikely to be able to convert rubles into “dollars equivalent to the amounts originally owed.”
According to S&P, a selective default is declared when an entity defaults. on specific obligation, but not all of it debt.
Moscow has a grace period of 30 days from April 4 to pay of capital and interest, but S&P said it does not expect to convert them into dollars given Western sanctions that undermine its “readiness and technical abilities in honor of terms and conditions” of This obligations.
BUT full default in foreign currency will be for Russia first in more than a century when Bolshevik leader Vladimir Lenin refused bonds issued by the tsarist government.
JPMorgan estimated that Russia had about $40 billion. of foreign currency debt at the end of last year, with about half of which are owned by foreign investors.
Moscow prepares for trial
Now Russia is planning a lawsuit.
“We will sue because we have taken all the necessary steps to ensure that investors receive their payouts,” Finance Minister Anton Siluanov told the pro-Kremlin newspaper Izvestiya. on Monday.
“We will show judicial evidence of our payments to confirm our payment efforts in rubles, just how did we do in foreign currency. It won’t be a simple process – it added. He did not say who Russia planned to sue.
This was stated by the official representative of the Kremlin Dmitry Peskov. in press conference last week that any default would be “artificial” because Russia has dollars to pay – this just Can not access them.
“There is no reason for a real default,” Peskov said. “Not even close.”
This measure is still in place but central bank decided to ease some other restrictions, Reuters reported on Monday, and last week announced What was it cutting interest rate up to 17%.
The ruble was trading at age 79 in the USA dollar on Monday, according to Refinitiv. This is about 5% weaker than on Saturday.
— David Goldman and Chris Liakos provided reporting.
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