Russia in first foreign debt in more than a century, bondholders claim | Business news

Russia has reportedly missed a deadline to pay investors of its international bonds, a scenario that would default it for the first time since the Bolshevik revolution of 1917.

According to Reuters news agency, some Taiwanese holders of Russian Eurobonds had not received any interest due when a grace period expired on Sunday.

Moscow would make $100 million (£81.4 million) in payments on two Eurobonds – $29 million on a 2036 euro-denominated bond and $71 million on a 2026 dollar-denominated bond.

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It was not clear why the default occurred.

Russia’s finance ministry said it had made payments in euros and dollars, adding that it had fulfilled its obligations.

However, it indicated last week that it was trying to meet impending payment deadlines through payments in rubles, blaming the impact of Western sanctions on its war in Ukraine.

They have seen hundreds of billions of dollars of its foreign exchange reserves frozen.

The country’s banking system is also cut off from large parts of the global market.

Bloomberg News quoted Russia’s finance minister as describing the apparent default as a “farce”.

The Kremlin has repeatedly said that there is no reason for Russia to default.

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It was not clear whether a ruble payment through Belgium-based bank Euroclear had been blocked or if Russia had been defaulted by bondholders because the money was not in the correct currency.

However, default was deemed inevitable when the US Treasury Department decided not to renew the exemption from sanctions rules that had allowed payments to foreign bondholders.

Jay S. Auslander, a leading sovereign debt attorney with Wilk Auslander in New York, said it can take time to establish a default.

“While there is a possibility that some magic could occur… no one is taking that bet.

“The overwhelming chance is that they won’t be able to, because no bank is going to move the money.”

While a formal default would be largely symbolic as the country is currently unable to borrow internationally, the stigma could increase borrowing costs when Russia eventually returns to the bond market.

It has $40 billion in international bonds outstanding, about half of which are held by foreign investors.