The position of Russia’s foreign currency debt is confused. Basically, bonds issued by Russian companies (state and corporate) in dollars. In recent days, the United States has banned the operation of Russian accounts at national banks such as Jp Morgan or Citigroup, accounts used for foreign currency payments to security holders. Therefore, last week Moscow was forced to pay a coupon in rubles from 650 million dollars. However, the US rating agencies (Standard & Poor’s, Moody’s and Fitch) have made it clear in recent weeks that a coupon payment in a currency other than that stipulated in the contract actually results in a default. Last Saturday, S&P downgraded the rating of Russian foreign currency bonds from CC to SD, ie in selective default. Today the Russian State Railways, russian railway, defaulted after failing to pay interest on a green bond Swiss franc, Last month. The coupon payment should have been made until March 14 with a grace period of 10 dayscorresponding Credit Derivatives Determination Committee UK, a body that regulates the international conditions for the administration of credits on derivatives. Among the creditors of Russian Railways there are also Unicredit which disbursed 545 million in loans to the company.
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The situation is objectively special because the Russia has the means to make payments and probably the will to do so. But because of the blockades imposed by its Western counterparts, it cannot. Finance Minister today Anton Siluanov announced that Russia will take legal action if the West tries to do so force them not to pay their debts sovereign. “Of course we will sue, the minister explained, because we have taken all necessary measures to ensure that investors receive their payments,” Siluanov told the newspaper in an interview, adding “We will file our bills in court and confirm our effort to pay both in foreign currency and in rubles. This will not be an easy process. We will have to demonstrate our case very actively, despite all the difficulties. Russia in good faith tried to repay external creditors , said Luanov “However, the deliberate policy of Western countries is to artificially create a default . Debts denominated in Russian foreign currencies account for about 20% of all debts, which together have a value of $261 billion. Before the invasion of Ukraine, rating agencies classified Moscow in the “investment grade category, ie countries for which the possibility of default is a very unlikely hypothesis. In order to decide any legal disputes, the holes provided for in the contracts of the individual bonds would become more frequent new york and london, where purely technical elements could not come into play.
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Meanwhile, Russia’s central bank has eased currency movement control measures put in place to limit the ruble’s fall. The Russian national currency has returned to preinvasion levels and is now trading around 1 to 81 with the dollar. In the morning, the exchange rate against the dollar deteriorated due to the easing effects. The central bank announced this on Friday eliminates a 12% foreign currency purchase fee via intermediaries from April 11th and will lift the temporary ban on selling foreign currency cash to individuals from April 18. The decision to abolish the 12% fee it means that speculators can trade againhe explained the Alor brokerage company to Reuters.
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