Russia is technically in default: what does this mean and what will be the consequences for Moscow

Russia is Default On Foreign debt For the first time 1918. Monday, June 27 at midnight Expired Period of payment to its investors International Bonds. $ 100 million was involved in interest on the two bonds. One will mature in greenback and the other in euros in 2026 and 2036. Moscow must have paid both bonds by May 27. He used Thirty-day “grace” period It expired at midnight on June 26th. The Default Triggered by sanctions and has a higher index value than anything else: Bankruptcy is not due to a lack of money on the part of the debtor. Closing of transfer channels by creditors.

Intervention of Ofac

Moscow had already touched the same probability in the first months of this year, but overcame the situation by changing payment methods. In May, however, the U.S. Treasury did not renew the license to exempt U.S. investors from sanctions: from that moment on, the Russians could no longer repay the loan in dollars or in the currencies mentioned in the issues. It’s a move Office of Foreign Asset Control (Ofac) of the U.S. Treasury Department.. “Anyone can announce what they want and try to attach any label in Russia,” said the Russian finance minister in recent days. Anton Siluvanov – But anyone who understands the situation knows that it is not the default by any means.

“Default notification is a symbolic event – they explained Bloomberg Economists of Nomura Research Institute – The Russian government has already lost the opportunity to provide loans in dollars. Now, Russia can not borrow from most foreign countries. Dennis HronitskyResponsible for sovereignty in Quinn Emanuel Law Firm, The default is inevitable, he told Reuters: “The only question is when. Ofac answered the question. While a formal default is often a sign that Russia will not be able to take out international loans at this time and will not need to thank its rich oil and gas receipts, the ‘brand’ is likely to increase its borrowing costs in the future.

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What is happening now

The Russian Ministry of Finance said he was paid National Settlement Depository (NST) Beach In euros and dollars. Thus the duties were said to have been fulfilled. But The funds are unlikely to reach international owners. For many securities, default is the failure to receive the money due in their accounts on time. Proponents of her case have been working to make the actual transcript of this statement available online. In 1998, with the crisis of the ruble, the Russian Federation announced a ban on repayment of contracts contracted with foreign investors for non-repayment of its internal debt.

The next target is gold. The G7 summit on Tuesday is expected to ban Russian gold imports, thus preventing oligarchy groups from using precious metal to transfer their assets, avoiding sanctions. Russia is the world’s second largest gold producer: Reflects 10% of the total extracted each year. According to the US administration, gold is the second largest commodity after Russian exports. In 2020, Moscow’s exports accounted for 5% of global exports. 90% of Russian production is levied on G7 countries, especially Great Britain.

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