Moody's Declares Russia in Default

PeopleOther ♦ Published: June 28, 2022; 10:10 ♦ (Vindobona)

The U.S. company Moody’s announced in New York that it was concerned with interest payments on two government bonds that had not been received by creditors even after a default period of 30 days had expired.

The Russian government has defaulted on its foreign debt for the first time since 1918. / Picture: © Wikimedia Commons / Naotokurihara / CC BY-SA 4.0

The rating agency Moody's has determined that Russia has defaulted on its debts to international investors because they have not been paid on time.

Reuters reported that some bondholders in Taiwan failed to receive interest payments as the deadline approached, indicating a default. According to unnamed sources cited by Reuters, Russia was scheduled to make $100 million in coupon payments on Eurobonds on May 27 - $29 million on a euro-denominated 2036 bond and $71 million on a dollar-denominated 2026 bond.

In most cases, credit rating agencies downgrade a country's rating when it defaults, but not in the case of Russia, which is no longer rated by most agencies, due to the war in Ukraine.

The Russian government has defaulted on its foreign debt for the first time since 1918, according to Moody's, as economic sanctions imposed by the West following its invasion of Ukraine have impaired the country's ability to make payments.

Bankruptcy in the conventional sense is not happening here. Due to Western sanctions imposed due to the war against Ukraine, the Kremlin has difficulties paying off its debts abroad due to its well-filled coffers. According to Russian Interfax Agency, Dmitry Peskov, a Kremlin spokesman, said that blocking Moscow's payments due to sanctions is "not our problem."