It’s thought that Russia has missed a crucial deadline and is now, for the first time since 1998, in debt default. Russia has the resources to make the $100 million payment to its international creditors, despite the fact that sanctions precluded it from doing so as of Sunday. Russia has the resources to make the $100 million payment to its international creditors, despite the fact that sanctions precluded it from doing so as of Sunday.
Since the default would have severely damaged the country’s reputation, it had been determined to avoid it.Dmitry Peskov, a spokesman for the Kremlin, said that declarations of a default “were absolutely unfounded.” He added that an intermediary bank had delayed the money and that the reserves had been “illegally” stopped.
According to the White House, Russia has stopped making payments on its international bonds, and sanctions are to blame for effectively cutting off Russia from the global financial system. It is not expected that the situation, which the Russian finance minister called “a farce,” will have an immediate effect.
Chris Weafer, CEO of the Moscow based company Macro Advisory, claims that Russia doesn’t need to acquire capital overseas because it is making money off of pricey commodities like oil.However, he asserted that if the situation with Ukraine and the international sanctions improves, it will result in a “legacy” issue.
“This is the kind of behaviour that will linger over the economy and make recovery much more difficult,” he cautioned when we get to that stage. The $100 million interest payment was due on May 27. Russia claims that the money was transferred to a bank called Euroclear, which subsequently dispersed it among investors.
Bloomberg News reports that this payment was kept there and has not yet been given to the creditors. Meanwhile, according to the Reuters news agency, which cited two sources, some Taiwanese bondholders of Russian notes denominated in euros have not received interest payments. The payment was due on Sunday night, but it wasn’t received until 30 days later.
Euroclear stated that it complied with all regulations placed in place as a result of Russia’s invasion of Ukraine while refusing to disclose if the payment had been suspended. Russia denies skipping a payment on the debt.
Moscow had already made the payments that were due in May, thus it was “not our problem,” according to Kremlin spokesman Dmitry Peskov, that Euroclear decided to withhold them owing to the sanctions.
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