Russia Makes Debt Payments To Avoid Default

Russia says it has made Overdue Payments on its Foreign Debt, heading off a possible Default next week. The Interest Payments, totalling $650m, were made in Dollars, it said. On Friday Russia's Central Bank Chief Elvira Nabiullina said that "there cannot be any talk of default" but acknowledged that there were "difficulties with payments".

Questions had grown about whether Moscow would be able to meet its May 4th Obligations. Payments on the Country's $40bn of International Bonds must be made in the Currency originally specified on the Bonds. But Russia has lost Access to much of its Reserve Funds held in Foreign Banks, due to Sanctions imposed by the West and Allies in the wake of its Invasion of Ukraine.

Earlier this month, Moscow proposed fulfilling its Obligations regarding these particular Bonds in Roubles, a suggestion Rejected by Moody's Investors Services. The Credit Ratings Agency, said Payment in anything other than Dollars would amount to a Default, which would have significant implications for Russia's Economy, including the ability to Borrow in future.

Russia last Defaulted on rouble-denominated Debt in 1998, when the Country went through a Financial Crisis. It Defaulted on its Foreign Currency Debt in 1918, following the Bolshevik Revolution. At that time Vladimir Lenin Refused to recognise the Debt Obligations inherited from the Tsarist Regime.

Russia said it had made the Payments to the London branch of Citibank, One of the Banks responsible for Disbursing the Payments. A U.S. Official said the Payments had been made, but Not using Frozen dollar Assets from within the U.S.

Russia's difficulties are likely to Increase before May 25th, when Sanctions Rules change, limiting further whether Western Agents are Permitted to process Russian Debt Payments.

Russia cut Interest Rates on Friday by 3% to try to boost the Flagging Economy. The main Lending Rate, which was raised in the immediate aftermath of the Invasion, is now at 14%.










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