Russia defaulted on its foreign debt

Islam News – Russia missed a deadline for making bond payments on Sunday, signaling its first default on international debt in more than a century, the New York Times said.

About $100 million in interest payments failed to reach investors within a 30-day grace period following a missed deadline last month. The default was prompted by widespread Western sanctions that sought to seal Moscow off from global capital markets following its invasion of Ukraine.

Russia’s finance ministry disputes the default, saying it had made the payments in May and they had been blocked by a Brussels-based financial clearinghouse. Dmitri S. Peskov, the Kremlin’s spokesman, told reporters that the statements about default were “absolutely illegal.”

Details: A formal declaration of default would need to come from bondholders because ratings agencies, which normally declare when borrowers have defaulted, have been barred by sanctions from reporting on Russia.

What it means: The default will linger in investors’ memories and probably push up Russia’s borrowing costs in the future. However, this default is unusual because it’s a result of sanctions blocking transactions; Moscow’s finances remain resilient after months of war, and Russia continues to receive a steady influx of cash from sales of oil and gas

Source: The New York Times