Russia may have gone bankrupt after trying to pay off its bonds in dollars in rubles because of Western sanctions over the war in Ukraine, Moody’s said in its first major default on Moscow foreign bonds since the 1917 revolution.
Moscow made a payment on April 4 for two government bonds – maturing in 2022 and 2042 – in rubles instead of dollars it owed to pay on securities terms.
Russia “therefore can be considered as defaulting on Moody’s terms, unless it changes by May 4, the end of the grace period,” the rating agency said.
“Bond contracts have no provision for repayment in any currency other than dollars,” it said.
Moody’s said that while some Russian bonds issued in euros after 2018 allow payment in rubles under certain conditions, those issued before 2018 (such as those expiring in 2022 and 2042) do not have such a provision.
“Moody’s position is that investors seem to have received the contractual promise of payment in foreign currency on the due date,” he said.
Source: Capital
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