The maturity date of Russia’s repayment of foreign currency-denominated government bonds is imminent again. The first default crisis in Russia was overcome by paying interest on government bonds, which expired on the 16th, but concerns about defaults remain as the maturity of other government bonds has returned one after another.
According to Reuters, Russia will have to repay a total of 4.7 billion dollars by the end of the year, starting with 66 million dollars in interest on government bonds.
The 16th was the payment date of $117 million in interest on two dollar government bonds issued by Russia in 2013, drawing keen attention to the possibility of Russia’s default declaration, but Russia paid it in dollars and overcame the first crisis safely.
Reuters reported that JPMorgan, a Russian exchange bank, processed the money sent by the Russian government under a temporary permit from the U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) and deposited it to Citigroup, a payment agent. Citigroup confirmed the funds and distributed them to creditors.
The problem for Russia is that the repayment schedule remains one after another, promising another default crisis
Russia will have to pay $12 million in interest on government bonds.
However, interest payments scheduled for the day and the 28th may be made in alternative currencies such as rubles depending on the conditions for issuing government bonds.
One fund manager put more weight on the dollar payment in that a notice is required 15 days in advance to exercise the alternative payment currency, but the Russian Finance Ministry did not announce it.
Morgan Stanley believes that Russia, which showed its ability and willingness to pay in dollars last week, will have no reason to use the alternative currency payment clause, but there is no guarantee that it will not.
Russia will also have to repay the principal and interest of national bonds worth 447 million dollars and 2 billion dollars on the 31st and 4th of next month, respectively.
