Russia Defaults On Its Foreign Debt As Grace Period For Payment Expires, Reports Say
ForbesDec 29, 2021
The Facts
In a historic move, Russia has defaulted on its foreign debt obligations, according to some bondholders. Official confirmation is expected from bond rating agencies.
After a 30-day grace period expired on Sun., Russia allegedly missed the deadline to repay its interest of $100M on two Eurobonds. The default was seen as largely inevitable after the US Treasury Dept.'s Office of Foreign Assets Control (OFAC) said it wouldn't renew a license allowing Russia to repay debt in US dollars on May 25.
The Spin
Anti-Russia narrative
Even if Russia moved the money to some escrow account as it claims, the obligations of the bonds aren't met until the funds have been released and bondholders confirm receipt. Russia cannot claim it had no other choice – it chose to wage its invasion into Ukraine and hasn't backed down in the face of sanctions.
Pro-Russia narrative
Russia's foreign debts amount to $57B, but it has foreign reserves of nearly $600B. America and the EU are putting up false barriers to prevent Russia from repaying its loan obligations, which is giving the appearance of a default. Anyone who looks can see this isn't a default at all.