Sign up now for FREE unlimited access to Reuters.com Register LONDON, April 15 (Reuters) – Russia may go bankrupt after trying to service its dollar-denominated bonds over Western sanctions over the war in Ukraine, said Moody’s, Moscow’s first major foreign bond bankruptcy. the years following the Bolshevik revolution of 1917. Russia paid on April 4 for two government bonds – maturing in 2022 and 2042 – in rubles and not in dollars it was ordered to pay under the terms of the securities. Russia “therefore can be considered a default according to Moody’s definition, if it does not heal by May 4, which is the end of the grace period,” Moody’s said in a statement on Thursday. Sign up now for FREE unlimited access to Reuters.com Register “Bonds have no provision for repayment in any currency other than dollars.” Moody’s said that while some Russian Eurobonds issued after 2018 allow payments in rubles under certain conditions, those issued before 2018 – such as those expiring in 2022 and 2042 – do not allow it. “Moody’s view is that investors did not receive the contractual promise in foreign currency at the due date,” Moody’s said. Russia has repeatedly said it wants to pay off its debt, but says the West has prevented it from paying by imposing deadly sanctions following a February 24 order by President Vladimir Putin to launch a special military operation in Ukraine. Russia owed $ 40 billion in domestic debt in 1998 and devalued the ruble under President Boris Yeltsin because it essentially went bankrupt after the Asian debt crisis and falling oil prices shattered confidence in its short-term debt. This time, Russia has the money, but it can not pay, because the reserves – the fourth largest in the world – that Putin ordered to be created for such a crisis have been frozen by the United States, the European Union, Britain and Canada. It could be Russia’s first major bankruptcy in more than a century. Even when the Soviet Union collapsed, Russia owed its foreign debt. In 1918, the Bolshevik revolutionaries under Vladimir Lenin renounced tsarist debt, shocking global debt markets because Russia then had one of the largest piles of foreign debt in the world. With the bonds worthless, some holders of tsarist banknotes used them as wallpaper. The Soviet Union under Joseph Stalin ceased to provide loans to the United States and Sweden after World War II. Sign up now for FREE unlimited access to Reuters.com Register Report by Guy Faulconbridge. Edited by: Kim Coghill Our role models: The Thomson Reuters Trust Principles.
title: “Russia May Be In Default Moody S Says " ShowToc: true date: “2022-12-07” author: “Shad Pellegrino”
Moody’s said Russia could go bankrupt because it tried to service its dollar-denominated bonds, which would be one of the strongest consequences to date of Moscow’s blockade of the Western financial system by President Vladimir Putin. Putin in Ukraine. If Moscow declares bankruptcy, it will mark Russia’s first major bankruptcy of foreign bonds since the years following the Bolshevik revolution of 1917, although the Kremlin says the West is forcing bankruptcy by imposing amputation sanctions. Russia paid on April 4 for two government bonds – maturing in 2022 and 2042 – in rubles and not in dollars it was ordered to pay under the terms of the securities. Russia “therefore can be considered a default according to Moody’s definition, if it does not heal by May 4, which is the end of the grace period,” Moody’s said in a statement on Thursday. “Bonds have no provision for repayment in any currency other than dollars.” Moody’s said that while some Russian Eurobonds issued after 2018 allow payments in rubles under certain conditions, those issued before 2018 – such as those expiring in 2022 and 2042 – do not allow it. “Moody’s view is that investors did not receive the contractual promise in foreign currency at the due date,” Moody’s said. The Russian Finance Ministry did not respond to a request for comment on Friday. Finance Minister Anton Siluanov told the Izvestia newspaper earlier this month that if Russia was forced into bankruptcy, it would take legal action. Prior to Putin’s order on February 24 for a special military operation in Ukraine, Russia was rated as an investment grade. But its government bonds have become the target of what the Kremlin says is an economic war waged by the United States. Russia owed $ 40 billion in domestic debt in 1998 and devalued the ruble under President Boris Yeltsin because it essentially went bankrupt after the Asian debt crisis and falling oil prices shattered confidence in its short-term debt. In 1918, the Bolshevik revolutionaries under Vladimir Lenin renounced tsarist debt, shocking global debt markets because Russia then had one of the largest piles of foreign debt in the world. This time, Russia has the money, but it can not pay, because the reserves – the fourth largest in the world – that Putin ordered to be created for such a crisis have been frozen by the United States, the European Union, Britain and Canada. DEFINED As Russia could not and would not borrow at the moment, a bankruptcy would be largely symbolic, marking the tumultuous finale of its post-Cold War effort to integrate into the economic architecture of the West. While Russia has only $ 40 billion in international bonds outstanding for $ 15 or euro issues, its companies have created far more foreign debt. The US Treasury Department this month suspended Russia’s ability to use the foreign exchange reserves held by the Russian central bank in US financial institutions to pay off its debt. The Kremlin says the West has already breached its obligations to Russia by freezing its reserves and wants a new system to replace the Bretton Woods economic architecture established by Western powers in 1944. Earlier this month, the S&P downgraded Russia’s foreign currency ratings to “selective bankruptcy” amid growing risks that Moscow would be unable and unwilling to meet its commitments to foreign debt holders. Russia’s economy is shrinking worse than it did in the years following the collapse of the Soviet Union in 1991, with inflation rising and capital flight. (Report by Guy Faulconbridge; edited by Kim Coghill and Frances Kerry)
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