On Monday night, Russia expired a grace period for about $100 million in interest payments due on May 27, and this deadline is considered a default event, Bloomberg writes on Monday.
It notes that this was „the culmination of increasingly severe Western sanctions that cut off payment routes to foreign creditors” and was the first time since 1918.
According to the agency, „this is a grim sign of the country’s rapid transformation into an economic, financial and political pariah,” as „the central bank’s foreign exchange reserves are frozen, and the largest banks are cut off from the global financial system.”
Bloomberg, however, admits that „given the damage already done to the economy and markets (Russia – IF) , the default so far is mostly symbolic and means little to Russians.”
The report says that Russia at the same time says it has the funds to cover any bills. It announced last week that it would switch to servicing its $40 billion of ruble-denominated sovereign debt, as the West artificially created the current foreign exchange situation.
As previously reported, the Ministry of Finance of the Russian Federation transferred rubles to the National Settlement Depository (NSD) for payment on Eurobonds Russia-2027 and Russia-2047 as part of a new scheme for servicing sovereign external debt, approved by presidential decree.
Funds in the total amount of 12.51 billion rubles. (equivalent to $234.85 million) were received by the paying agent for Eurobonds – National Settlement Depository JSC, the Ministry of Finance said in a statement.
Thus, the obligations were fulfilled in full, the Finance Ministry said.