Russia has defaulted on foreign currency debt for the first time in a century, as the period for paying $100 million in interest has expired, according to US newspapers.
She said Bloomberg At the end of Sunday, the grace period expired on regarding 100 million dollars and euros in interest payments due on May 27.
Russia had the necessary funds and intended to pay, but the sanctions imposed on it made it impossible to deliver the payments to international creditors. According to the Wall Street Journal.
The newspaper reported that it was the first time that Russia had defaulted on foreign debt payments since 1918.
It is not expected that the Russian economy will be affected immediately by this measure, according to the newspaper The Wall Street JournalBut default will damage Russia’s creditworthiness and Moscow’s ability to sell debt securities in the future.
Russian bonds have been trading undervalued since the post-invasion days, a sign that investors thought default was a possibility.
The last time Russia failed to repay its foreign debt was during the Bolshevik Revolution when Vladimir Lenin, the newly installed communist leader, repudiated the debts of the Russian Empire.
Russia defaulted on its ruble-denominated bonds during a financial crisis in 1998, but was able to keep up with the payment of its foreign debt at the time.
Russia has accused the West of causing an “artificial default”, and in recent months has aggressively sought to funnel money in devious ways to get the required payments into the hands of bondholders.
Russia’s foreign debt is relatively small compared to the size of its economy, and it has a lot of money selling oil and gas, but allied Western governments have disrupted the Kremlin’s ability to tap foreign bank accounts or use cross-border payment networks to move money.
Because Russia has the money and intent to pay, its default is expected to present unique legal challenges.
The default is not expected to have a widespread impact on the Russian economy, as Russia has reduced foreign borrowing in recent years, making it less dependent on foreign capital.
But in the long run, a default would make it difficult for Russia to return to the international financial markets.
