Default did not happen – ExpertRU
The Ministry of Finance of Russia paid a coupon in foreign currency for the issue of Russian Eurobonds in the amount of $117.2 million. Thus, the technical default predicted by Western rating agencies did not occur.
The money was sent through the London branch of Citibank. The Ministry of Finance said that the bank confirmed that these messages were received. Interestingly, Russia’s payments came from the country’s frozen foreign exchange reserves. This means that the US and the EU have backed down on sanctions, possibly against the backdrop of an aggressive policy about the intentions of countries to expand the scope of settlements with Russia in other currencies. On the due date, Russian debt president Vladimir Putin said that the default on his obligations was actually declared Europe and the weather: their action called into question the reliability of the so-called first-class assets, the president said, since financial reserves are believed to be simply decorated.
In the end, the US Treasury announced that the current sanctions do not prevent the service of Russia’s sovereign debt in dollars until May 25. Transactions to receive dividends and interest were authorized by the Bank of Russia, the National Wealth Fund and the Ministry of Finance. This relief only applies to old debt issued before March 1, 2022. What will happen after May 25 is still unknown, but at the end of May, therefore, can be considered a kind of serious milestone in the entire geopolitical situation.
It is interesting that Russian Eurobonds with securities rose in price in anticipation. Before a possible default, interest in assets arose among hedge funds and other players buying risky assets. According to rumors, the Russian government debt is invested in big US capital: JPMorgan and Goldman Sachs.
In addition to the money already transferred by Russia in 2022, according to the Ministry of Finance, you are paying about $2.66 billion more. Of this amount, 2.54 billion are payments on government securities denominated in foreign currency. Russia has to evaluate 132 million dollars in loans to different countries and foreign companies.
Large large companies also have significant debt, but payments in foreign currency are prohibited. True, and here there is room for maneuver. Thus, the Ministry of Finance allows at least six federal companies to issue Eurobonds in foreign currency. These are Gazprom, Rosneft, Norilsk Nickel, Severstal, NLMK and Russian Railways. Meanwhile, companies fear that Citibank, through which payments must be made, may refuse to do so. True, Severstal on March 16 already lost a trial payment to car owners: 1% of the bond coupon was transferred. If the payment reaches the recipients, the company is going to transfer the remaining money.
Another large company, VC, which has previously survived the risk of corporate default, is developing the ability to treat convertible bonds first. The holders of these securities have received the right to early release due to the suspension of trading on the London Stock Exchange.
The ruble reacted to the positive news by strengthening. By Friday, the exchange rate had gone below 105 rubles, that is, the ruble had strengthened against the dollar by 10% over the week (on March 14, 117 rubles were given for the dollar).