(Finance) – Possible default by Russia if it does not pay the expired bonds in dollars. To sound the alarm is Moody’s which looks to May 4, the deadline for the “grace period”.
According to the rating agency, Moscow’s recent ruble payments on dollar bonds will be considered “default” if the situation is not remedied within 30 days of the maturity of the tranches.
The Russian government’s decision to make two payments due on April 4 in local currency changes the terms of the original bond contracts. “Bond contracts do not provide for repayment in any currency other than the dollar,” explains the agency.
According to Moody’s, therefore, “it can be considered default” – according to the agency’s definition – if the payments of two bonds maturing in 2022 and 2042 “are not remedied by the end of a grace period on May 4”.
Moody’s explains that some Russian Eurobonds, issued after 2018, allow payments in rubles under certain conditions, while for those issued before that date, maturing in 2022 and 2042, it is not foreseen. “Moody’s view is that the investors did not get what was written in the contract, in foreign currency, at the due date,” thunders the rating agency.