News Tech: Russia on Wednesday set aside the ruble to pay international bondholders who have to pay back in dollars as long as their foreign exchange reserves are blocked by sanctions, bringing the country closer to a possible default on its international debt. has blocked payments to bondholders of more than $600 million from reserves frozen in U.S. banks, saying Russia must choose between depleting its dollar reserves at home or defaulting.
If this impasse continues and debt service payments are blocked, they (future payments) could be made in rubles,” he said. Moscow was able to make a series of foreign exchange coupon payments on part of 15 outstanding international bonds with a par value of about $40 billion before the US stopped such trading. Sanctions have frozen about half of Russia’s $640 billion in gold and foreign exchange reserves, but the country still derives billions of dollars from oil and gas exports.
Russia has not defaulted on its foreign debts since its payment default after the 1917 Bolshevik Revolution, but its debt has become the focus of a diplomatic crisis and sanctions between Moscow and Western capitals. “This shortens the timeline for when Russia is no longer willing and able to pay,” said a fund manager who holds one of the bonds that matured on Monday. The Kremlin said it would continue to pay dues. Kremlin spokesman Dmitry Peskov said, “Russia has all the resources it needs to service its debts.
Russia’s Finance Ministry on Wednesday refused to issue orders for foreign banks to pay bond holders $649 million to redact their holdings of dollar-denominated Eurobonds maturing in 2022 and 2042 said that it is necessary to pay the ruble to the The finance ministry said an unnamed foreign bank had rejected a Russian order to pay coupons on two government bonds and had not processed a eurobond payment due in 2022.