Russia has defaulted on its foreign debt, says S&P

Authored by edition.cnn.com and submitted by yurient

London (CNN Business) Russia has defaulted on its foreign debt because it offered bondholders payments in rubles, not dollars, credit ratings agency S&P has said.

Russia attempted to pay in rubles for two dollar-denominated bonds that matured on April 4, S&P said in a note on Friday. The agency said this amounted to a "selective default" because investors are unlikely to be able to convert the rubles into "dollars equivalent to the originally due amounts."

According to S&P, a selective default is declared when an entity has defaulted on a specific obligation but not its entire debt.

Moscow has a grace period of 30 days from April 4 to make the payments of capital and interest, but S&P said it does not expect it will convert them into dollars given Western sanctions that undermine its "willingness and technical abilities to honor the terms and conditions" of its obligations.

A full foreign currency default would be Russia's first in more than a century, when Bolshevik leader Vladimir Lenin repudiated bonds issued by the Tsarist government.

red_purple_red on April 11st, 2022 at 12:45 UTC »

The US debt holders are going to be bailed out with the frozen Russian cash reserves. So everyone gets paid, but Russia technically defaults. It will be interesting to see how that affects Russia being able to borrow in the future.

ripecannon on April 11st, 2022 at 09:59 UTC »

Forgive my ignorance, can someone explain to me who's debt they defaulted on, and what impact does it have on the entity it was defaulted to?

Apxm on April 11st, 2022 at 09:40 UTC »

In 1998, Russia -- under president Yeltsin -- defaulted on its domestic debt and declared a 90-day moratorium on payment of foreign debt.