LONDON (Reuters) – Russia could find itself in sovereign default in early May after it tried to settle its last maturities on dollar-denominated bonds in rubles, due to the lack of availability of its greenback reserves due to Western sanctions. in the wake of the invasion of Ukraine.
Russia settled in rubles maturities due on April 4 on two sovereign bonds maturing in 2022 and 2042, while the coupons should have been settled in dollars in view of the initial bond contracts.
The contracts for the bonds in question, issued before 2018, make no provision for settlement in a currency other than the dollar, while this possibility exists for certain bonds issued after 2018, Moody’s explained Thursday in a press release.
Russia “could therefore be considered in default according to Moody’s definition if the situation is not corrected by May 4, the end date of the grace period”, indicates Moody’s, which estimates that in this case the contractual commitment with regard to the investors will not have been kept.
If Russia were to default on its foreign currency debt, it would be the first since the czar’s debt repudiation after the 1917 revolution.
(Report Guy Faulconbridge, French version Myriam Rivet, edited by Jean-Michel Bélot)
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