Russia may declare defaults coming days

Russia has defaulted on its foreign debt because it offered bondholders payments in rubles, not dollars, credit ratings agency S&P has said, News.az reports citing Top News Canada.

Russia attempted to pay in rubles for two dollar-denominated bonds that matured on April 4, S&P said in a note on Friday. The agency said this amounted to a “selective default” because investors are unlikely to be able to convert the rubles into “dollars equivalent to the originally due amounts.”

According to S&P, a selective default is declared when an entity has defaulted on a specific obligation but not its entire debt.

Moscow has a grace period of 30 days from April 4 to make the payments of capital and interest, but S&P said it does not expect it will convert them into dollars given Western sanctions that undermine its “willingness and technical abilities to honour the terms and conditions” of its obligations.

A full foreign currency default would be Russia’s first in more than a century, when Bolshevik leader Vladimir Lenin repudiated bonds issued by the Tsarist government.

JPMorgan estimates that Russia had about $40 billion of foreign currency debt at the end of last year, with about half of that held by foreign investors.

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