Moscow is likely to have averted a state bankruptcy for the time being.
(Photo: Bloomberg)
London Russia has apparently been able to avert a state bankruptcy as a result of western sanctions for the time being. Some holders of $117 million in Russian dollar bonds have received the interest payments due, two market participants told Reuters on Thursday.
The payments are seen as a first test of whether the government in Moscow can meet its international debt obligations after the West also wants to hit the Russian financial market with sanctions.
The Ministry of Finance in Moscow announced on Thursday that it had ordered the payments. “The coupon was paid contrary to my expectations, and in dollars,” said one market participant. Other beneficiaries said they have not yet received any money but are optimistic that they will.
The interest payments on the bonds were already due on Wednesday. However, a default by Russia will only become official once the 30-day grace period has expired. It would be the first time since 1998 that Russia defaulted on its debt.
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Meanwhile, US credit rating agency S&P lowered its rating on Russia’s creditworthiness even deeper into junk territory. The grade for long-term foreign currency bonds is now at “CC” after “CCC-” – that was already rubbish.
More: Confusion over interest payments on Russian dollar bonds