Russia’s failure to pay $1.9million in accrued interest on a dollar bond will trigger payouts potentially worth billions of dollars. A panel of investors determined, as the country teeters on its first major external debt default in over a century.
Sanctions imposed by western countries and their allies on Russia following its invasion of Ukraine on Feb. 24, as well as counter measures by Moscow, have all but excluded the country from the global financial system.
Russia’s international 2022 bond matured on April 4 and payment of principal and interest due at maturity was not made until May 2.
There are currently $2.54 billion of net notional CDS outstanding in relation to Russia. Including $1.68 billion on the country itself and the remainder on the CDX.EM index, according to JPMorgan calculations.
The focus for a wider default is now on a coupon payment due June 24 on a bond issue in 1998 .
Russia has under $40 billion of international bonds outstanding and close to $2 billion in payments is due through year-end.
Russia’s Finance Minister Anton Siluanov said last month that Moscow will service its external debt obligations in roubles if the United States blocks other options and will not call itself in default as it has the means to pay. Not all bonds allow for payment in roubles, however.
Russian dollar-denominated bonds rose between 1 cent and 2.5 cents on Wednesday, Refinitiv data show.
-Reuters.
