Russia’s non-payment of monthly interest on dollar-denominated bonds has been formally considered a credit event by the Credit Derivatives Commission, bringing Moscow even closer to the brink of state bankruptcy.
In particular, the Credit Derivatives Determinations Committee (CDDC), which includes leading banks such as Bank of America, Goldman Sachs and JPMorgan, ruled that there had been a “default” by Russia, which had repaid the outstanding bond debt. April 4 within the grace period, but did not include in that $ 1.9 million interest payment for the delay period.
According to the decision published on the Commission’s website, 12 of the banks ruled that the action constituted a “credit event”, while only Citi’s vote was negative.
The decision means that the relevant insurance products (CDS) related to this bond will be activated, the value of which is estimated at approximately $ 2.5 billion, however the Commission will make a final decision on the matter on June 6.
The low level of the unpaid interest rate ($ 1.9 million) combined with the fact that Moscow has repaid the bond capital, means that the decision does not constitute a wider default on Russia’s sovereign debt.
This, of course, is what most investors think is a matter of time, after the US last week withdrew the exemption that allowed American investors to continue receiving Russian bond payments.
Source: Capital
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