Russia plans to settle its obligations with regard to Eurobonds using a mechanism similar to the scheme used to pay for Russian gas in rubles, the Vedomosti newspaper reported, citing Finance Minister Anton Siluanov.
The United States pushed Russia closer to bankruptcy last Wednesday with their decision not to extend their license to pay bondholders, as Washington intensifies pressure after the Russian invasion of Ukraine.
In the face of an unprecedented debt crisis, Finance Minister Anton Siluanov said on Friday (May 27th) that Moscow would continue to service its foreign debt in rubles.defending its role as a credible borrower by all possible means.
In order to receive payments, Eurobond holders will have to open foreign currency and ruble accounts in a Russian bank, Siluanov told Vedomosti.
“As with the payment for gas in rubles: we are credited in foreign currency, here it is exchanged for rubles on behalf of (the gas buyer), and this is how the payment is made. The Eurobond settlement mechanism will work the same way, but in the other direction, “Siluanov was quoted as saying by Vedomosti.
Russia will be able to bypass Western payment infrastructure using the system, with payments being made through Russia’s NSD securities depository, Siluanov told Vedomosti.
There will be no limit to the conversion of the ruble into foreign currency and the scheme will be reviewed by the government soon, he added. The Treasury Department did not immediately respond to a request for comment.
This month, before the expiration of the US basic payment waiver that allowed Moscow to pay its foreign debt, the NSD made foreign exchange payments for Eurobonds maturing in 2026 and 2036. Both payments expired on May 27, with a 30-day grace period.
By many definitions Russia will be insolvent if the money does not appear in creditors’ accounts by the end of this grace period. Eurobond coupon payments should be paid by the end of June.
Russian President Vladimir Putin has demanded that “unfriendly” countries he calls pay for gas who buy in rubles otherwise the supply is cut off. Buyers are required to deposit euros or dollars into a Russian bank account, which then converts the money into rubles.
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