Russia could default on international bonds, says Moody’s

LONDON: Russia could also be in default after it tried to service its greenback bonds in roubles on account of Western sanctions over the battle in Ukraine, Moody’s mentioned, Moscow’s first main default on international bonds for the reason that years following the 1917 Bolshevik revolution.

Russia made a cost due on April 4 on two sovereign bonds – maturing in 2022 and 2042 – in roubles reasonably than the {dollars} it was mandated to pay underneath the phrases of the securities.

Russia “subsequently could also be thought-about a default underneath Moody’s definition if not cured by Might 4, which is the top of the grace interval,” Moody’s mentioned. “The bond contracts haven’t any provision for reimbursement in every other forex aside from {dollars}.”

Moody’s mentioned that whereas some Russian eurobonds issued after 2018 permit funds in roubles underneath some situations, these issued earlier than 2018 – equivalent to these maturing in 2022 and 2042 – don’t.

“Moody’s view is that buyers didn’t acquire the foreign-currency contractual promise on the cost due date,” Moody’s mentioned.

Russia has repeatedly mentioned it desires to service its debt however counters that the West has prevented it from paying by imposing crippling sanctions after President Vladimir Putin on Feb 24 ordered a particular army operation in Ukraine.

Russia in 1998 defaulted on US$40bil (RM169bil) in home debt and devalued the rouble underneath President Boris Yeltsin as a result of it was successfully bankrupt after the Asian debt disaster and falling oil costs shook confidence in its short-term rouble debt. — Reuters


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