Russia might be in default after it tried to service its US dollar bonds in rubles due to Western sanctions over the war in Ukraine, financial ratings agency Moody’s Corp said on Thursday.
It would be Moscow’s first major default on foreign bonds since the years following the 1917 Bolshevik revolution.
Russia made a payment due on Monday last week on two sovereign bonds — maturing this year and in 2042 — in rubles rather than US dollars, as it was mandated to do under the terms of the securities.
Photo: EPA-EFE
Russia “therefore may be considered a default under Moody’s definition if not cured by 4 May, which is the end of the grace period,” Moody’s said in a statement. “The bond contracts have no provision for repayment in any other currency other than dollars.”
Moody’s said that while some Russian euro-denominated bonds issued after 2018 allow payments in rubles under some conditions, those issued before 2018 — such as those maturing this year and in 2042 — do not.
“Investors did not obtain the foreign-currency contractual promise on the payment due date,” Moody’s said.
Russia has repeatedly said that it wants to service its debt, but counters that the West has prevented it from paying by imposing crippling sanctions after Russian President Vladimir Putin on Feb. 24 ordered a “special military operation” in Ukraine.
Russia in 1998 defaulted on US$40 billion in domestic debt, and devalued the ruble under then-Russian president Boris Yeltsin because it was effectively bankrupt after the Asian debt crisis and falling oil prices shook confidence in its short-term ruble debt.
This time, Russia has the money, but cannot pay because its foreign exchange reserves — the world’s fourth largest — which Putin ordered be built up for just such a crisis, are frozen by the US, EU, UK and Canada.
It could be Russia’s first major debt default in more than a century. Even when the Soviet Union collapsed, Russia assumed its foreign debt.
In 1918, Bolshevik revolutionaries under Vladimir Lenin repudiated Tsarist debt, shocking global markets, as Russia had one of the world’s biggest foreign debt piles.
With the bonds worth nothing, some holders of the Tsarist notes used them as wallpaper.
The Soviet Union stopped servicing loans to the US and Sweden after World War II.
NETWORK-MAPPING PROJECT: The database contains 170 detailed files of Taiwanese politicians and about 23 million records of household registration data in Taiwan China has developed a network-mapping project targeting political figures and parties in Taiwan to monitor public opinion during elections and to craft tailored influence campaigns aimed at dividing Taiwanese society, according to documents leaked by Chinese technology firm GoLaxy (中科天璣). The documents, collected by Taipei-based Doublethink Lab, showed a database was specifically created to gather detailed information on Taiwanese political figures, including their political affiliations, job histories, birthplaces, residences, education, religion and a brief biography about them. Several notable Taiwanese politicians are in the database, including President William Lai (賴清德), former president Tsai Ing-wen (蔡英文), Minister of Foreign Affairs Lin Chia-lung (林佳龍),
RECOGNITION: Former Fijian prime minister Mahendra Chaudhry said that Taiwan’s New Southbound Policy serves as a stabilizing force in the Indo-Pacific region Taiwan can lead the unification of the Chinese people, Nobel Peace Prize laureate and former Polish president Lech Walesa said in Taipei yesterday, adding that as the world order is changing, peaceful discussion would find good solutions, and that the use of force and coercion would always fail. Walesa made the remarks during his keynote address at a luncheon of the Yushan Forum in Taipei, titled “Indo-Pacific Partnership Prospects: Taiwan’s Values, Technology and Resilience,” organized by the Taiwan-Asia Exchange Foundation with the Ministry of Foreign Affairs. Walesa said that he had been at the forefront of a big peaceful revolution and “if
UPGRADED MISSILE: The Chungshan Institute of Science and Technology is reportedly to conduct a live-fire test of the Hsiung Feng III anti-ship missile on Thursday next week The US Army is planning to build new facilities to boost explosives production and strengthen its supply chain, a move aimed at addressing munitions shortages and supporting obligations to partners including Taiwan, Ukraine and Israel, Defense News reported. The army has issued a sources sought notice for a proposed Center of Excellence at the Blue Grass Army Depot in Kentucky, the report said. The facility would serve as a hub within the US industrial base for the production of key military explosives, including research department explosives (RDX) and high melting explosives (HMX), while also supporting research and development of next-generation materials. The proposed
SOUTH KOREA DISPUTE: If Seoul continues to ignore its request, Taiwan would change South Korea’s designation on its arrival cards, the foreign ministry said If South Korea does not reply appropriately to a request to correct Taiwan’s name on its e-Arrival card system before March 31, the government would take corresponding measures to change how South Korea is labeled on the online Taiwan Arrival Card system, the Ministry of Foreign Affairs said yesterday. South Korea’s e-Arrival card system lists Taiwan as “China (Taiwan)” in the “point of departure” and “next destination” fields. Taipei has asked Seoul to change the wording. Since March 1, South Koreans who hold government-issued Alien Resident Certificates (ARC) have been identified as from “South Korea” rather than the “Republic of Korea,” the
RSS