Rating agency Moody’s said Russia could be in default (defaulting due to non-fulfillment of legal obligations or loan terms) as it tried to pay off its dollar bonds in rubles, with the harshest consequences to date. will be one of Exclusion of Moscow from the Western Financial System since invasion of ukraine by President Vladimir Putin.
If the situation is declared, it would be Russia’s first major default on foreign bonds since the years since the Bolshevik Revolution of 1917, although the Kremlin says the West is forcing the default by imposing crippling sanctions.
Russia made payments on April 4 on two sovereign bonds – payable in 2022 and 2042 – in rubles instead of dollars, as required by the bond’s terms.
Deadline to declare default is May 4
Russia, therefore, “in Moody’s definition, may be assumed by default, if [a situação] This has not been resolved as of May 4, which is the end of the grace period, Moody’s said in a statement on Thursday.
Bond contracts are not payable in a currency other than the dollar.
Moody’s said some Russian Eurobonds issued after 2018 allow payment in rubles under certain conditions, which those issued before 2018 – such as in 2022 and 2042 – do not.
Moody’s is of the opinion that the investors did not receive the contractual promise in foreign currency on the payment due date.
The Russian finance ministry did not respond to a request for comment on Friday. Finance Minister Anton Siluanov told Izvestia newspaper earlier this month that Russia would take legal action if forced to default.
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