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 on the 21st (local time), 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.
However, the situation is not so simple due to Western economic sanctions.
The sanctions will ban transactions with Russian financial institutions, central banks and sovereign wealth funds, but OFAC will allow interest, dividends and maturity payments on bonds or stocks issued by the Russian central bank until May 25.
Since then, May 27 is considered an important milestone. It is the first payment date that returns after the expiration of OFAC’s temporary permit.
As a result, Russia can pay 2026 dollar bonds and 2036 euro bonds to its Rublo regional accounts, Reuters said. Russia’s Finance Ministry has mentioned this as a fallback option.
Reuters predicted that only euro bonds allow rubles to be paid, which could trigger a default on dollar bonds.
Morgan Stanley predicted that OFAC’s temporary permission may be extended, but it will be possible only if significant progress is made, such as easing tensions between the West and Russia.
This means that if Russia does not pay bonds within a set grace period or tries to repay bonds with rubles that specify dollar or euro payments, it can enter the default path.
