Russia has defaulted on its external debt for the first time in more than a century, the report said.

Russian President Vladimir Putin, right, hears from Finance Minister Anton Siluanov at the Eurasian Economic Council in St. Petersburg, Russia, Thursday, December 6, 2018.

Russia’s Treasury Minister Anton Siluanov and President Vladimir Putin have accused the country of drastic sanctions.Olga Marzewa / AP

  • Russia missed Sunday’s deadline to pay $ 100 million in interest on two foreign currency-denominated bonds.

  • Russia has money to pay, but sanctions prevent payments from going through the global system.

  • Russia finally defaulted on its external debt in 1918 during the Bolshevik Revolution.

According to the media, Russia has defaulted on its external debt for the first time in more than a century because it cannot pay creditors due to sanctions against the Ukrainian war. Report..

The country missed the payment deadline $ 100 million in dollar and euro denominated interest With two foreign currency denominated bonds on Sunday The Wall Street Journal Reported by citing bond holders. Some Taiwanese who hold Russian bonds did not receive interest by the deadline. Reuters Two sources were cited and reported.

Russia said it has transferred bond payments in the ruble to the country’s national settlement vault. Reuters Reported last week. However, bond contracts do not allow payment in rubles. That is, payments will continue. Configure the default. It is also unclear how bondholders will have access to ruble payments. Russian national settlement vault It has been Approved by the EU.

In May, the US Treasury also ended the exemption from major sanctions that would allow payments of Russian government bonds to be passed on to US investors. In response to the, Russia He said he would start using the ruble to pay dollar bonds.

This marks the first default of Russia’s external debt since 1918, when Communist leader Vladimir Il’nin rejected the debt of the Tsarist era during the Bolshevik Revolution.

However, Russia does not have the money to pay, so this time it is not the default.That finances are now well held up thanks to Soaring energy prices.. Instead, defaults occur because US and European Union sanctions are blocking bond interest payments from passing through the international payment system.

Until Sunday Russia was getting better Regarding bond payments, even as sanctions have been wiped out. However, markets have expected countries to eventually default on foreign bonds as international trade restrictions tighten.

To counter this situation, President Vladimirputin signed a decree on Wednesday to process foreign bond payments under the new program. Reuters report. Russia has about $ 40 billion in unpaid foreign currency payments.

Russia says it’s not the default

Formal default declarations are usually issued by credit rating agencies, but the three major agencies, S & P, Moody’s and Fitch, have withdrawn all ratings of Russian entities due to sanctions.

Russia has rebelled against what is called a “force majeure situation,” and Finance Minister Anton Siluanov calls this situation a “chaban drama.” Bloomberg Reported last Thursday.

“Anyone can declare what they like,” Siluanov said in an email statement to Bloomberg last week. “But anyone who understands what’s going on knows that this is by no means the default.”

A lawyer told Reuters that Russia may have to pay until the end of Monday because the bond prospectus doesn’t specify an exact deadline.

And Russia may still be able to get money for bondholders through financial institutions, but “the overwhelming probability is that banks aren’t going to move money, so they can get it. You can’t, “said Jay S. Auslander, a lawyer with top sovereign debt. Associated Press.

Russia does not have widespread financial relations globally, so the impact of Russia’s default on the global financial system is limited. Harry Robertson Reported in March.

Russian External debt is fairly low Compared to the size of the economy, defaults are unlikely to have a serious impact on the country.However, the default will affect Confidence of Russian credit, In the future, it will make it difficult for countries to borrow in the international market.

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