Russia fulfils Eurobonds obligations using new mechanism that allows it to pay in Roubles

Russia's finance ministry on Thursday, June 23 said that it had fulfilled all its obligations on two dollar-denominated Eurobonds "in full" by making the payments well in time. Moscow announced that it has made the interest payments in its own currency Roubles to its National Settlement Depository as it seeks to avoid the sovereign default. Earlier on Wednesday, Russia’s President Vladimir Putin had signed a decree to make new rules that were aimed at fulfilling Russia's foreign debt obligations so the nation does not default on the debt.

The Kremlin has been iterating that despite the barrage of sanctions, there is no ground for the government to default on its debts as they have largely realigned their financial policies and that the government has enough funds to pay. Russia, however, hasn't been able to make the interest payments to bondholders due to the sanctions. Russia’s MFA lambasted the West for attempting to push it into an artificial default. According to Tass, Moscow’s Finance Minister Anton Siluanov underscored that the termination of Eurobond payouts in ‘foreign currency’ does not indicate that the country has international debt default. The United States hasn't renewed Moscow’s license that would have made it possible for it to pay out the Russian external debt in foreign currency. 

Russia asserts its Eurobond obligations are 'not in default'

The Russian Finance Ministry had earlier snubbed the suspicions that Moscow's Eurobond obligations are "in default." At a state presser, the ministry iterated that the Kremlin has enough funding to pay off its debts well in time and as per the schedule. It furthermore noted that payments have been due to a few international investors as Russia decided to put it on hold owing to speculations of some illegal activities by American banks and the US government as they refused to make payment to Russia in foreing currency. Russia, as a responsible borrower, has taken additional efforts to protect the rights of investors by reserving the required amounts in rubles in a Russian depository, the foreing ministry of Moscow had reiterated.

The ministry also emphasised that the volume of the instruments in circulation decreased as a result of the Finance Ministry's early redemption of 72.4% of the Russia-2022 bond issue from the Kremlin's investors for rubles in the month of March. This resulted in the amount of payment due on them to be reduced from USD 2,045.0 million to USD 564.8 million.