Russia Pushed To Default On Foreign Debt

Russia missed payments on two foreign-currency bonds as Western sanctions pushed it to its first default on foreign debt since the Bolshevik revolution.

• The grace period on the equivalent of $100mn in dollars and euros of delayed interest payments expired at midnight Moscow time.
• Wires cite bondholders as noting that they have not received the payment, which is tantamount to a default event.
• The West and Russia have played a game of cat and mouse over the past few months, with Moscow finding alternative ways to settle payments amid the ever-tighter sanctions regime.
• The default poses a legal challenge, since Russia accuses the West of artificially manufacturing its default by preventing it from transferring money to bondholders.
• In anticipation of the event, Russia enacted laws that allow it to pay interest on foreign debt in roubles, but it will be difficult for investors to repatriate these funds without breaching sanctions.