Monday, April 11, 2022

Russia Defaults On Railway Bond

A European Debt Agency, has voted, to a Class A Bond issued, by Russian Railways, as being in Default, marking the First time a Russia-originated Debt Instruments has been Officially classified as Defaulted, since the Country's Invasion of Ukraine.

The EMEA Credit Derivatives Determinations Committee, whose Members include some of the World's biggest Investment Banks, said on Monday, it had decided a "failure to pay" Credit event has occurred, on Swiss Franc Loan Participation Notes linked to State-owned Russian Railways.

The Loan Participation Notes, due 2026, were issued by RZD Capital, to Finance a Loan of 250 million Swiss francs ($268 million) to Russian Railways.

Western Sanctions against Russia following the Ukraine Invasion, which Russia says is a "special military operation", have imposed Strains on the Russian Econom,y and raised questions about the possible Default of many Bonds issued by Russian Corporations.

This has raised the possibility of Substantial Writeoffs by Western Lenders to Russia.

Bank of America, Goldman Sachs International, and JPMorgan Chase Bank, are some of the Committee Members who voted "yes" to the question on whether a Failure to Pay Event occured on these Assets. The Committee met on April 8th.

Russian Railways said it had attempted to make Interest Payments due March 14th, but was unable to "legal and regulatory compliance obligations within the correspondent banking network," according to an Official Notice, posted by the SIX Swiss Exchange, and Referenced in the Request to the Committee.

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