(Washington) Moody’s investor arm confirmed on Thursday that Russia “could be considered in default” if it does not pay two dollar installments by the end of the grace period on May 4. .
Posted at 4:51 p.m.
For several weeks, Russia managed to avert the danger of a default despite the sanctions imposed on it, because the US Treasury allowed the use of foreign currencies held by Moscow abroad to settle foreign debts.
But the US ministry has tightened the sanctions, no longer accepting dollars held by Moscow in US banks.
The Russian Ministry of Finance announced at the beginning of April that it had settled in rubles a debt of nearly 650 million dollars.
Moody’s said in a statement that the April 4 payment of two bonds maturing in 2022 and 2042, in rubles rather than US dollars, “changes the payment terms from the original contracts and can therefore be considered as a default” if Moscow does not pay this debt by May 4, the end of the grace period.
“The bond contracts do not provide for any reimbursement in a currency other than the dollar,” continues Moody’s.
“Although Eurobonds issued after 2018 allow repayments in rubles under certain conditions, those issued before 2018 (including the 2022 and 2042 bonds) either do not contain this alternative currency clause, or only allow repayment in other strong currencies (dollar, euro, pound sterling or Swiss franc)”, details the agency.
On April 9, the financial rating agency S&P Global Ratings had already announced that it had lowered Russia’s rating for its foreign currency payments to the level of “selective default”, precisely because Moscow had settled the debt in rubles. by Moody’s.
A country is considered in default of payment when it is unable to honor its financial commitments to its creditors, which may be States, financial institutions (International Monetary Fund, World Bank, etc.) or investors in the financial markets. .
The default is qualified as partial when the State does not reimburse part of its obligations.