News Tech: Russia on Wednesday came close to a possible default on its international debt as it said it would pay dollar-denominated bondholders in rubles and will continue to do so as long as its foreign exchange reserves are blocked by sanctions. The U.S. on Monday blocked Russia from paying bondholders more than $600 million from reserves frozen in U.S. banks, leaving Russia to have to choose between depleting its dollar reserves at home or defaulting said no.
If this impasse continues and debt service payments are blocked, they ( Future payments) may 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 face 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 earns billions of dollars from oil and gas exports.
Russia has not defaulted on its foreign debt 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. Dmitry Peskov, spokesman for the Kremlin, said: “Russia has all the resources it needs to service its debt.
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.