The Bloomberg agency has announced that Russia has entered into suspension of payments for not having paid a series of Eurobond coupons. Russia claims to have paid them and proposes new payment mechanisms given the impossibility of operating in euros and dollars, due to the sanctions imposed against the country.
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Russia claims to have paid “in its entirety” the service of the external debt, and accuses third parties of the information on a supposed “suspension of payments”.
That is the Russian response to the financial news of the day, the country’s entry into receivership, announced by Bloomberg.
A month ago, on May 27, the Russian State had to pay in euros and dollars the coupons of two Eurobonds due in 2026 and 2036. The Russian Ministry of Finance indicated that same day that the national depository paid 71.25 million dollars for the 2026 bonds and 26.5 million euros for those of 2036.
According to the Interfax agency at the time, Russia made said payments on May 20 before the expiration on May 25 of the US license that until then allowed it to deal with its foreign debt in dollars.
However, last Sunday, when the grace period for the payment of said bonds had expired, the money had not reached its recipient. “In this case the inability of investors to receive their money did not occur as a result of non-payment, but due to the actions of third parties,” he explains.
It accuses the operators that had to guarantee the payment of failing to fulfill their function despite having both legal and financial instruments to do so.
In turn, investors have been directed to complain to these international financial institutions, since, he argues, the behavior of the mediators is beyond the control of the Russian authorities.
Impossibility of operating in dollars or euros
According to the Bloomberg agency, Russia entered into suspension of payments on Monday for the first time in 100 years.
Russia has not been able to make payments on its external debt due to the inability to operate with dollars and eurosas a consequence of the sanctions imposed by the European Union and the United States.
Therefore, according to the US agency, “the debtor in suspension of payments (Russia) has the will and the resources to pay, but cannot do so.”
The Ministry of Finance ensures that Russia “does not refuse to meet its debt obligations to all categories of investors”, but rather, given the technical impossibility of making payment in foreign currencies, proposes “new payment mechanisms”.
In view of the blockade of payment channels to foreign creditors. Russian President Vladimir Putin signed a decree on Wednesday of last week, June 22, which allows the state to pay Russian obligations to foreign holders in rubles of Eurobonds of the Russian State.
The decree establishes that “the obligations against the Eurobonds of the Russian Federation are recognized as fulfilled if they are made in rubles for an amount equivalent to the value of the obligations in foreign currency”, using the exchange rate formed in the national foreign exchange market. of Russia on the day on which the State makes the payment.
Using this decree, Russia has already made several eurobond payments in rubles. The last ones have been a payment of two coupons denominated in dollars maturing in 2027 and 2047, and a third coupon, of a Eurobond maturing in 2028 denominated in dollars, for which the Russian State has transferred 8.5 billion rubles, the equivalent to 159.4 million dollars, to the national depository, in charge of making the payment.
Putin explained that to make the transfer effective, investors have to open a special type “I” account in a Russian bank and can then convert the interest payment received into another currency and withdraw it abroad.
Russian Finance Minister Anton Siluánov assured on Thursday that the payment scheme applied by Russia in rubles does not mean falling into default.
“No, it does not. The Russian Federation does not refuse to fulfill its obligations. And as a responsible borrower, it takes all possible measures to transfer the funds to all investors. Foreign counterparties refuse to make payments in foreign currency ( coming from Russia), which is a force majeure event for us,” he stressed. “And for this reason alone we are switching to ruble payments,” he added, according to the official TASS agency.
Payment in rubles would breach the prospectus for issuing Eurobonds. According to Bloomberg, this situation is considered an event of suspension of payments, although, according to the agency at the moment it has a “rather symbolic character and is not a big deal for the Russians.”
Source: Eitb
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