Russia has a real problem: Insolvency, for foreign bonds can not pay in rubles! – Topky.sk

The contract says clearly, must be paid in dollars, the deadline have until the beginning of May Russia on April 4 paid the installments of two government bonds due in 2022 and 2042 in rubles. However, dollars are set in the terms of the bond repayment. Therefore, according to Moody’s definition, Russia is insolvent if it does not fix it by May 4, which is the end of the 30-day tolerance period, the rating agency said on Thursday (April 14). “These bond contracts do not have a provision to repay in currencies other than dollars,” Moody’s said, adding that some Russian Eurobonds issued after 2018 allow, under certain conditions, repayments in rubles, bonds issued before, and the bonds mentioned in 2022 and 2042 do not allow this. “According to Moody’s, the investors did not receive payment in foreign currency on the due date,” which Russia has contractually committed to. They cannot pay for the war in Ukraine, and subsequent sanctions Moscow has repeatedly stated that it wants to repay its debt, but this is hindered by Western sanctions imposed on Russia for its attack on Ukraine. Russia failed to repay short-term ruble debt in 1998, when it was hit by the Asian debt crisis and the fall in oil prices. The situation is different at the moment, although Russia has money, it cannot repay the debt because the US, the EU and Canada have frozen its foreign exchange reserves, which are the fourth largest in the world. This would be Russia’s first major collapse in more than a century, as even in the late 1990s, after the demise of the Soviet Union, it was able to offset foreign debts. Photo gallery (2) Red Square in Moscow
Source: SITA / AP Photo / Alexander Zemlianichenko Jr. Like Moody’s, another of the three major rating agencies, Standard & Poor’s Global Ratings, commented at the end of last week, which worsened Moscow’s credit rating. Standard & Poor’s lowered Russia’s rating to the level of partial insolvency (selective default, SD).