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29 Apr, 2022 15:35

Russia makes sovereign bond payments

Moscow’s Ministry of Finance says dollar payments on foreign bonds previously stuck by sanctions are progressing
Russia makes sovereign bond payments

Russia has finally managed to make dollar payments on two foreign bonds after sanctions introduced on the country’s financial system over its offensive in Ukraine had been holding transactions up for weeks.

The country settled the $564.8 million payment on a 2022 Eurobond and $84.4 million payment on a 2042 bond, Russia’s Finance Ministry said in a statement, adding that Moscow sent dollars to the paying agent, the London branch of Citibank N.A.

Earlier this month, Moscow attempted to pay foreign holders of Eurobonds in rubles after Western nations froze nearly half of Russia’s foreign exchange reserves, worth over $300 billion, as part of sanctions over Ukraine.

The step was taken after the US Treasury stopped Russia from paying holders of its sovereign debt more than $600 million from reserves held in US bank accounts, saying that Moscow had to choose between draining its dollar reserves and default.

Russia would be considered in default if it failed to make the bond payment within a 30-day grace period that was to end on May 4. Moscow has repeatedly insisted that the blocking of payments should be considered as a default by the West on its financial obligations to Russia.

Meanwhile, international credit rating agencies continued to warn that Russia is on the brink of its first major default on foreign bonds since the years following the Bolshevik Revolution of 1917.

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