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Russia denies default: “Not our problem”

2022-06-27T14:38:02.489Z

Russia is nearing a technical default as the country's creditors fail to get their money. The Kremlin points out that it has transferred the appropriate funds: the sanctions are to blame.



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Soon possibly the richest bankrupt of all time?

Russian President Vladimir Putin

Photo: Sergei Bobylev / ITAR-TASS / IMAGO

The Kremlin has denied reports that Russia has defaulted on its foreign debt.

According to the Interfax agency, Kremlin spokesman Dmitry Peskov said on Monday that they "did not agree" with such reports.

The payment due was made in May.

The fact that the funds were blocked by the service provider Euroclear because of Western sanctions against Russia is "not our problem," said Peskov.

A 30-day period during which interest was due on two government bonds in foreign currency expired during the night.

It is about a payment of one hundred million US dollars (94.7 million euros).

Russia stresses that it is economically able and willing to service the debt.

However, Western sanctions are preventing the payment, since Moscow can neither access its foreign assets frozen in the West nor transfer domestic reserves to foreign financial institutions.

According to the Treasury Department in Moscow, the installment due for the interest was paid on May 20, five days before the ban on Russian payments issued by the US Treasury Department's regulatory agency OFAC came into effect.

Finance Minister Anton Siluanov therefore called the impending default a "farce".

Moscow is swimming in money - but cannot transfer it

After a payment and grace period expired on Sunday evening, several Taiwanese investors complained that they had not yet received any of the agreed interest payments for their Russian government bonds.

A deadline for paying $100 million in interest on two foreign currency bonds expired on Sunday -- $29 million for a euro-denominated 2036 bond and $71 million for a dollar-denominated bond maturing in 2026.

Actually, Russia was supposed to make the payments on May 27, but it didn't happen.

A grace period of 30 days then began, which has now ended.

Since no exact deadline is given in the bond prospectus, the lawyers believe it is possible that Russia will have until the end of Monday to service its creditors.

Since the February 24 invasion of Ukraine, sweeping sanctions have locked Russia out of the global financial system.

Since then, Moscow has struggled to make payments on outstanding bonds totaling $40 billion, despite billions in foreign exchange reserves.

The Kremlin has repeatedly stated that it sees no reason for default.

However, due to the sanctions, it is not possible to transfer money to the bondholders.

The West is therefore accused of wanting to force the country into artificial insolvency.

beb/dpa

Source: spiegel

All business articles on 2022-06-27

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