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Putins Signs Decree to Skirt Future Default Claims

RUSSIA
  • Interfax reports that President Putin has signed a decree on temporary procedures for fulfilling Russia's foreign debt obligations.
  • The headlines refer to proposals made to skirt around the looming Eurobond payments due in the coming weeks. This would allow Russia to continue to argue that they're fulfilling their foreign debt obligations after the failure of the US to renew General Licence 9A (preventing Russia from making FX payments to investors) some weeks ago.

The measures include:

  • Allowing the use of “substitute” bonds to repay Eurobonds, while also cancelling the cross-default provision on bonds (meaning default on one line of bonds won’t necessarily trigger a broader default condition).
  • Allowing Russia will pay RUB on its Eurobond obligations that can be later converted into FX at the exchange rate on the day of payment.

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