Radio Silence on Russia Debt Payments Keeps Default Risk in Play

[Tactical Peek]

Source: Bloomberg


Radio Silence on Russia Debt Payments Keeps Default Risk in Play

Thursday marks the start of 30-day grace period for settlement
Russia warns without access to dollars, it’ll pay in rubles

By

Maria Elena Vizcaino, Irene Garcia Perez, and Giulia Morpurgo

March 16, 2022, 5:40 AM CDT

Updated on March 16, 2022, 5:38 PM CDT

As the deadline for coupon payments on Russia’s dollar bonds drew to a close Wednesday, there were no signs that holders of the debt had received their cash.

Bondholders in Europe and one in the U.S. said they hadn’t received cash in dollars at the close of business in their respective countries, and weren’t aware if payments were made in either the greenback or rubles into accounts in Russia. They declined to be identified because they aren’t authorized to discuss the matter publicly. The $117 million interest on the two bonds was expected to be settled before the end of the day in New York.

Starting Thursday, the nation has a grace period of 30 days to pay off the coupons in dollars before creditors can determine a default has occurred. If that happens, it will be the nation’s first on foreign-currency bonds since the Bolsheviks refused to service or recognize the czar’s debts over a century ago. In 1998, Russia defaulted on local-currency debt and declared a moratorium on payments for its foreign-currency bonds.

How the nation handles the coupon payments is a critical indicator of the way it intends to manage its relationship with global investors in the future. Not only has it seen its ties with business and political partners disintegrate in the weeks since its invasion of Ukraine, it has also lost its investment-grade ratings and become the world’s most-sanctioned nation.



Read more: https://www.bloomberg.com/news/articles/2022-03-16/russia-s-watershed-moment-for-bonds-is-a-117-million-payment

---

I wonder how this fits with CNN reporting that Russia said they had "ordered" the payments to be "sent".

https://www.democraticunderground.com/100216492622


The check is in the mail?

[Tomconroy]

1. Paid in rubles? Monopoly money?

[Lasher]

6. They will likely make the payments, but probably in rubles rather than dollars.

Some of Russia’s debt contracts permit such an arrangement; the two bonds in question do not.

https://www.theguardian.com/commentisfree/2022/mar/17/major-economy-cant-pay-debt-dollars-russia-default

[littlemissmartypants]

2. Vlad is supposedly worth between 40 and 100 billion dollars. Let him pay it.

[BumRushDaShow]

3. "Starting Thursday, the nation has a grace period of 30 days to pay off the coupons"

So absent anything else, they really have 30 more days until a "technical" default might actually be declared.

[herding cats]

8. That's true.

This could stretch out for the full 30-days. This is just the very beginning of all this. They have another $615 million due over the rest of the month and $2 billion principal due on April 4th.

Russia's plan seems to be to say they've paid the debt payment and the illusion of pending default is on the USA, presumably since this particular debt must be paid in USD.

The reality might be the banks are wanting no part of this mess and are just declining to participate, as is implied in the clip below. We shall see how this shakes out overtime.

Two market sources told Reuters that Russia had made a transfer to the correspondent bank, which they named as JPMorgan, but said it was not immediately clear if those funds had been moved to Citi to pay bondholders because of restrictions related to U.S. sanctions on Russia.

JPMorgan declined to comment.

"Russia may have wired money to pay but it's possible that the transfer agent and custodian are playing hardball," one person said, saying Western banks were increasingly wary of dealings with Russia and might be reluctant to send funds.

https://www.reuters.com/world/europe/russia-says-its-order-pay-117-mln-eurobond-interest-fulfilled-2022-03-17/

[Lonestarblue]

4. The Russian government needs to be bankrupted.

No money for the military, no money for the oligarchs, no money for the police state—all good things. I’m sorry that ordinary Russians would be hurt, but they have known what Putin is for a couple of decades now and accepted him. His sanctioned murder of opponents, both in Russia and in Europe, should have been a clue, as well as his senseless and absolutely brutal war in Chechnya. Russians had access to this information. They demanded nothing. I suppose I shouldn’t judge because it’s easy to ignore some things when you’re not personally affected. But a majority of Russians still support Putin, and they have access to the Internet to find out the truth. They do not need to take the word of Russia’s government propaganda that spews out the same nonsense as Fox News here. Smart people know that Fox is a sham.

[BlueIdaho]

5. Starve Russia until they deliver Putin

Dead or Alive.

[JudyM]

7. The article quotes the Russian Fin. Min. as saying instructions were submitted for the payment

Russian Finance Minister Anton Siluanov reiterated Wednesday that there’s a risk the transfer in greenbacks won’t go through. Russia has sent the instruction for the payment to the U.S. bank that normally handles the transactions, but the ministry hasn’t received either a rejection or a confirmation, he was cited as saying by the RIA Novosti news service. If the transfer fails, then the payment will be made in rubles, he said earlier this week

So it is in process… it’ll be interesting to see what happens.