- Russia attempted to pay in rubles for two dollar-denominated bonds that matured on April 4, S&P said in a note on Friday.
- Russia cannot access roughly $315 billion of its foreign currency reserves as a result of Western sanctions imposed following its invasion of Ukraine.
- Until last week, the United States allowed Russia to use some of its frozen assets to pay back certain investors in dollars.
According to credit rating firm S&P, Russia has defaulted on its international debt because it offered investors payments in rubles rather than dollars as reported by CNN.
Selective default
Russia attempted to pay in rubles for two dollar-denominated bonds that matured on April 4, S&P said in a note on Friday.
The agency said this amounted to a “selective default” because investors are unlikely to be able to convert the rubles into “dollars equivalent to the original due amounts.”
According to S&P, a selective default is declared when an entity has defaulted on a specific obligation but not its entire debt.
A full foreign currency default would be Russia’s first in more than a century when Bolshevik leader Vladimir Lenin repudiated bonds issued by the Tsarist government.
Russia cannot access roughly $315 billion of its foreign currency reserves as a result of Western sanctions imposed following its invasion of Ukraine.
Until last week, the United States allowed Russia to use some of its frozen assets to pay back certain investors in dollars.
Moscow prepares to go to court
“We will sue because we undertook all necessary action so that investors would receive their payments,” Finance Minister Anton Siluanov told pro-Kremlin Izvestia newspaper on Monday.
“We will show the court proof of our payments, to confirm our efforts to pay in rubles, just as we did in foreign currency.”
He did not say who Russia planned to sue.
Kremlin spokesperson Dmitry Peskov said in a press conference last week that any default would be “artificial” because Russia has the dollars to pay — it just can’t access them.
“There are no grounds for a real default,” Peskov said.
The ruble was trading at 79 to the US dollar on Monday, according to data from Refinitiv.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: CNN
