Russia’s national depository to replace Citi as a Eurobond service agency


According to the Ministry of Finance, Russia has replaced Citibank, which has stopped servicing Eurobonds, with its own national settlement depository because of the risk of major external debt defaults for the first time in more than a century.

After the launch of an operation called “Special Military Operation” in Ukraine on February 24, sanctions imposed on Russia by Western nations and their allies have largely excluded Russia from the global financial system.

Last month’s expiration of a major US license that allowed Russia to make payments refocused on the country’s outlook for default.

But Russia has cash and refuses to talk about the default and says it is ready to pay. Treasury Minister Anton Siluanov said on Monday that Moscow will continue to repay its external debt in the ruble.

On Thursday, the Ministry of Finance announced that Citibank will be a financial, transfer, and payment agent and registrar on the four Eurobond issues, which will mature in 2023, 2028, 2042, and 2043, from May 24. He said he had stopped playing the role of an institution.

“The function of the payment agent for the designated bond issuance and other functions have been transferred to the National Settlement Vault in accordance with the law of the Russian Federation,” the Treasury said.

Russia is currently considering paying Eurobond holders by applying the mechanism used to process gas payments in the ruble.

The Ministry of Finance also said Thursday that the delay in payment of the Russian-2022 Eurobond, which expired on April 4, was caused only by the “illegal act” of foreign financial intermediaries.

He said he had reviewed all claims on the debt of the Russian-2022 Eurobond and was ready to settle bilaterally if necessary.

Reuters

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