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Russia to pay $2 billion bonds in US dollars to foreign investors
Russia is preparing to make payments on a $2 billion debt maturing next week, as per the country’s regulatory filings, after Moscow recently averted a big debt default.
Notices filed with the country’s National Settlement Depository show Moscow to make an “interest payment” and “principal repayment” on $2 billion of dollar-denominated debt due April 4.
The bond was the most significant one to mature since Russia was hit with sanctions following its invasion of Ukraine.
Moreover, Russia is planning to use dollars to repay the foreign investors, Bloomberg reported on Wednesday, citing a person familiar with the matter.
The report said that while the Finance Ministry launched a buyback on Tuesday in rubles to ensure local investors get paid, international investors will receive dollars.
Moscow also filed a notification for a coupon on bonds due in April 2042, with the payment date set for April 4.
Fear of defaulting
Russia earlier this month paid $117 million in bond interest on two foreign-currency bonds, a portion of the $2.6 billion payment due in the coming weeks.
The payment helped the country avoid its first default on its foreign debt obligations since 1918.
Investors feared that Russia would not be able to meet its debt obligations, as economic sanctions have essentially cut Moscow off from its foreign currency reserve of about $640 billion and access to the global financial system.
However, Russia will face another hurdle on Thursday, as it will have to make payments of $87.5 million on notes maturing in 2030.
Following the March debt payments, the research firm MSCI said investors believe there’s a 50% chance of the country defaulting in the next 12 months.
The three major credit-rating agencies— Fitch, Moody’s, and S&P Global — have slashed Russia’s credit rating to junk territory in anticipation of a default.
Picture Credit: Reuters