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⚡️Bloomberg: Sanctions push Russia to first foreign default since 1918.
Russia has defaulted on its foreign-currency sovereign debt for the first time in a century due to punitive Western sanctions imposed for its full-scale invasion of Ukraine.
— The Kyiv Independent (@KyivIndependent) June 27, 2022
From the beginning of this stupid fake war, the West kept saying that they were going to “force Russia to default” by destroying their economy.
Then they totally failed to destroy their economy, so they decided to force them to default by blocking them from making payments, just so they could go around prancing about how “Russia has defaulted.”
It’s not like anyone is going to give them loans now anyway, and if they ever were in the future, they wouldn’t hold “defaulted as a result of being banned from making payments” against them.
Russia looked set for its first sovereign default in decades as some bondholders said they had not received overdue interest on Monday following the expiry of a key payment deadline a day earlier.
Russia has struggled to keep up payments on $40 billion of outstanding bonds since its invasion of Ukraine on Feb. 24, as sweeping sanctions have effectively cut the country off from the global financial system and rendered its assets untouchable to many investors.
The Kremlin has repeatedly said there are no grounds for Russia to default but it is unable to send money to bondholders because of sanctions, accusing the West of trying to drive it into an artificial default.
Russia’s efforts to avoid what would be its first major default on international bonds since the Bolshevik revolution more than a century ago hit a insurmountable roadblock in late May when the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) effectively blocked Moscow from making payments.
“Since March we thought that a Russian default is probably inevitable, and the question was just when,” Dennis Hranitzky, head of sovereign litigation at law firm Quinn Emanuel, told Reuters. “OFAC has intervened to answer that question for us, and the default is now upon us.”
While a formal default would be largely symbolic given Russia cannot borrow internationally at the moment and doesn’t need to thanks to plentiful oil and gas export revenues, the stigma would probably raise its borrowing costs in future.
The payments in question are $100 million in interest on two bonds, one denominated in U.S. dollars and another in euros , Russia was due to pay on May 27. The payments had a grace period of 30 days, which expired on Sunday.
Russia’s finance ministry said it made the payments to its onshore National Settlement Depository (NSD) in euros and dollars, adding it has fulfilled obligations.
Some Taiwanese holders of the bonds had not received payments on Monday, sources told Reuters.
For many bondholders, not receiving the money owed in time into their accounts constitutes a default.
With no exact deadline specified in the prospectus, lawyers say Russia might have until the end of the following business day to pay the bondholders.
Anyway, slow news day.
Slow news day.
