Business | As the payment deadline approaches, Russia enters default.

Business | As the payment deadline approaches, Russia enters default.


  • The grace period on the $100 million interest payment due on May 27 expires
  • According to accounts, several Taiwanese bondholders were not paid on Monday.
  • Russia claims that sanctions are to fault and that it has the money to make the payment.
  • Russian payments are stopped by a lapsed US waiver and EU NSD sanctions.
  • A “credit event” has already been designated by the CDS committee.

Reuters, LONDON, June 27 – As some bondholders claimed they had not paid past-due interest on Monday after a crucial payment deadline expired the previous day, Russia appeared on track for its first sovereign default in decades.

Since it invaded Ukraine on February 24, Russia has failed to make bond payments totaling $40 billion since extensive sanctions have virtually closed off the nation from the world’s financial system and made its assets inaccessible to many investors.

The Kremlin has said time and time again that there is no reason for Russia to go into default, yet sanctions prevent it from paying bondholders, and it accuses the West of trying to force it into a fake default.

The Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department effectively stopped Moscow from making payments in late May, making Moscow’s attempts to avert what would be its first significant default on international bonds since the Bolshevik revolution more than a century ago impossible.

According to Dennis Hranitzky, head of sovereign litigation at the law firm Quinn Emanuel, “Since March we knew that a Russian default is likely, and the question was only when.” “OFAC has stepped in to provide that response for us, and the default is now upon us,” the statement reads.

Although a formal default would primarily be symbolic because Russia cannot currently borrow internationally and doesn’t need to because of its ample income from oil and gas exports, the reputational damage would cause its borrowing prices to increase in the future.

Russian debt was set to be repaid on May 27 in the amount of $100 million in interest on two bonds, one with a U.S. dollar and one with a euro par value. The 30-day grace period for the payments ended on Sunday.

According to the Russian Finance Ministry, it has fulfilled its responsibilities after paying its onshore National Settlement Depository (NSD) in both euros and dollars.

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