Russia Could Soon Default on Dollar Debt

Russia is on the verge of defaulting on its debt for the first time since 1998 as the Sunday deadline to pay $100 million interest seems certain to be missed. Russia has the money and is willing to pay, but sanctions have prevented it from making payments to international creditors, as reported has it  .

 “The National Settlement Depository (NSD) payment agency has received funds for the payment of coupons on external bonds of the Russian Federation maturing in 2027 and 2047 for a total of 12.51 billion rubles (equivalent to £234.85 million),” the Russian Finance Ministry said in a statement.

 In a statement, the ministry said it was using a new temporary payment system which came into force on June 22, after sanctions imposed over Ukraine made it difficult for Moscow to service its foreign debt.

 Under the new system, the ministry transfers rubles equivalent to the value of coupons to the Moscow-based NSD, which reimburses creditors in rubles at the Central Bank’s exchange rate “to ensure maximum equivalence of payments.”

 Russia’s Finance Ministry said earlier in a statement that it was “ready to consider and, if there are necessary grounds, to bilaterally settle all complaints regarding the full fulfillment of debt obligations on the ‘Russia-2022’ Eurobonds.”

 The statement provided two e-mail addresses, adding that “all requests will be considered.” Some creditors have requested “additional interest” for the period of non-payment, the statement said.

 The ministry blamed the delay in processing payments on “illegal actions of foreign financial intermediaries.”