Russia is willing to pay its debt interest. In the case of foreign debt, this is usually done in US dollars or euros – but not in rubles. Experts do not consider this permissible.
Despite the tense relationship with the West, Russia continues to pay interest on government bonds that are due – not in dollars or euros, but in rubles.
Interest on two bonds (Eurobonds) due in 2027 and 2047 was paid on Thursday, the Ministry of Finance announced in Moscow. The interest, equivalent to 235 million US dollars, was sent to the Russian payment agency NSD, it said. The ministry said the payment was complete.
The problem, however, is that the payments from there can hardly be forwarded to Western payment offices and thus ultimately to Western creditors, since the NSD is subject to Western financial sanctions because of the Ukraine war.
Russia has therefore set up a new procedure in which the creditors have to prove the ownership of the bonds to the NSD. After that, the interest should be able to be passed on. However, due to Western sanctions, it is unclear whether the procedure will work.
It is also currently questionable when one can speak of a payment default with possible further consequences in the direction of a state bankruptcy. Because while Russia wants to service its debts and could do so given the existing reserves, the financial sanctions of the West stand in the way.
The payment in the Russian national currency ruble is also disputed. Actually, interest payments on foreign debt are usually provided in US dollars or euros. However, since Russia no longer has access to its foreign exchange reserves in the West due to sanctions, payments are to be made in the Russian currency from now on. President Vladimir Putin signed a corresponding decree on Wednesday.
Interest payments at the weekend are particularly important. These relate to bonds for which a 30-day period expires during which Russia can still make delinquent interest payments without triggering a default. The question is what will happen if Russia does not pay the interest or pays it in rubles. Experts consider payment in rubles to be inadmissible unless this is indicated as an option in the specific terms of the issued bonds.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
