Russia walks the plank to a foreign bond default

Russia&#039;s failure to send an interest payment to creditors is triggering a payout on debt insurance, taking the country another step closer to its first default on international bonds since the Bolshevik revolution more than a century ago.On Friday, the European Union expanded sanctions on Russia, including on a domestic payments processing firm Moscow hoped to use for servicing its Eurobonds.Nudging Russia towards a debt crisis through the mechanism of financial sanctions is part of a wider stand-off that has built up between the Kremlin and the West during the 100 days since Russia&#039;s invasion of Ukraine, which it refers to as a "special operation".Under President Vladimir Putin, Russia has been ejected from the financial systems which oil the wheels of global trade. A default will seal its status as a pariah.Defaulting nations are usually bankrupt or unwilling to pay. Russia, though, has hundreds of billions of dollars, and earns billions more weekly from oil and gas sales.So, the circa US$40 billion of foreign bonds outstanding with around US$2 billion in payments due by year-end should be easily manageable.Moscow also wants to pay, to avoid getting lumped in with the poor and chaotically governed nations which typically default.But a welter of sanctions by the United States and the European Union prevents it from sending money through the global payments system. An exemption that allowed US owners of Russian sovereign bonds to receive payments has now expired.That is pushing Russia towards default by blocking the path by which payments would reach bondholders&#039; bank accounts.Russia has touted paying creditors in roubles or hard currencies other than the dollar, bypassing Western payment infrastructure.Finance minister Anton Siluanov suggested replicating the rouble-conversion payments scheme Russia imposed on European gas customers, with creditors opening accounts at a Russian bank to be paid in currencies other than the dollar. -Fin24

Russia walks the plank to a foreign bond default

Comments

Namibian Sun 2026-10-13

Please login to leave a comment

Russia walks the plank to a foreign bond default

Comments

Namibian Sun 2026-10-13

Please login to leave a comment

Subscription Required to Access Content ×

Login

Subscription Required to Access Content