Russia pays bond maturities in rubles with analysts talking about a moratorium on payments in a few days

LAST UPDATE: 13:40

Russia has paid off its latest ruble bond coupon, citing new rules that allow it to service its foreign currency in local currency, with only a few days left before it may reach its first foreign debt default in a century. .

The Ministry of Finance transferred the amount of 12.51 billion rubles or 235 million dollars in interest on securities expiring in 2027 and 2047, to the National Reserve of Russia (NSD), according to an email announcement.

Under legislation passed by President Putin on Wednesday, Russia considers its foreign bond obligations fulfilled as soon as it transfers rubles to its local payer, in this case the NSD.

However, none of the bonds have terms that allow settlement in this currency.

The funds will be kept in special accounts in the depository until the investors prove the ownership of their bonds, after which they can apply for a permit for conversion and repatriation of funds.

Investors who choose to use this new route must submit their written consent and waive any future objections to the process.

It is unclear whether the latter maneuver, which aims to reduce the risk of sanctions by avoiding settlement systems abroad, will be used by foreign investors.

And while an additional $ 159 million payment is pending for June 24, for a title that expires in 2028, a more pressing deadline is Sunday night for previous unpaid payments, from the end of May.

These funds, about $ 100 million in bond coupons, have been stuck due to international sanctions, and the grace period to find a solution expires at the end of the day on June 26th.

At this point, Russia will be virtually bankrupt unless it makes payments to several bondholders in some way.