Russia Made Some Bond Payments to Avoid Historic Debt Default
- March 18, 2022
- Posted by: Quatro Strategies
- Category: Legislation
Russia may have prevented its first external bond default in over a century after some creditors received payments of Russian bond coupons in dollars. Russia had to make payments until Wednesday.
The Russian finance ministry earlier said that it had made payments on two dollar denominated sovereign bonds, worth a total of $117 million.
Whether Russia could pay the debt had been watched by governments and financial institutions alike, as it was seen as the first test for the country’s economy after it was crippled by Western sanctions.
Some other creditors said they had not yet received payment but were hopeful it was on the way, mentioning they had received payments on hard currency bonds from a raft of state-run and private Russian companies in recent days.
The external sovereign bond payments were due first after the sanctions imposed on Russia. Bondholders feared the transaction would not go through.
Russia initially planned to send payments in roubles if dollar payments did not reach foreign bondholders, which would amount to a sovereign default if not corrected within 30 days.
One of the first sanctions the U.S. imposed days after Russia’s invasion of Ukraine was blocking the U.S. citizens from engaging in any transaction involving the country’s central bank.
However, in early March the U.S. allowed Americans to receive interest, dividend or maturity payments in connection with debt or equity issued by Russia’s finance ministry, central bank or wealth fund until May 25.
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