Citibank London branch is an agent… Check to accept payment
Russias finance minister also ordered interest payments on overseas frozen assets
“I do my duty to the creditors… Now the ball goes to America.”
Even after this crisis passes, interest due again at the beginning of next month of $2 billion [Edaily Reporter Jang Young-eun] Russia, which is in crisis of default for the first time in 100 years, on the interest of $117.2 million in foreign currency denominated government bonds that matured on the 16th, “The payment order has been fulfilled. ” he said.
Russian Finance Minister Anton Shiluanov announced on the 16th that interest on two foreign currency denominated government bonds due to maturity would be paid out of frozen assets.
According to Reuters on the 17th, Russias Ministry of Finance said in relation to the interest payments on two Eurobond coupons that day, “The London branch of Citibank is acting as a payment agent for interest payments on Eurobond coupons of $117.2 million.” “The payment order has been fulfilled.” done,” he announced. “We will update separately on whether the payment has been accepted on the payment agent account,” he added.
In this regard, Reuters cited Citigroups memo as saying, “The Russian government has set strict conditions for foreign investors who want to buy and sell Russian assets.”
Earlier, Russian Finance Minister Anton Siluanov said in an interview with the state-run Russia Today on the day before that he had ordered payments from overseas frozen assets and that “Russia has fulfilled its obligations to its creditors well.” “It is not up to us whether we can meet our obligations in foreign currency,” he said. Now the ball is on the American side.”
After Russias invasion of Ukraine on the 24th of last month, the West excluded major Russian banks from the International Interbank Telecommunication Associations payment network and frozen Russian assets deposited in foreign banks. Shiluanov said Western sanctions have cut off about half of Russias $315 billion foreign exchange reserves.
Coupon interest payments on two Eurobonds maturing on the 16th served as the first test of Russias ability to repay its debts, which is subject to severe economic sanctions. These government bonds have a grace period of 30 days, extending the repayment period until April 15. If repayment is not made by this time, it will be treated as a final default.
CNN reported on the same day that Russia said it would pay interest on foreign assets that were frozen due to international economic sanctions following the invasion of Ukraine, and it is still unclear whether investors will actually receive interest.
International rating agency Fitch noted on the 15th that if the US blocks interest payments from frozen Russian assets, Russia will try to pay interest in rubles rather than dollars, but this could be considered default. Under the original contract, interest cannot be paid in rubles.
Western investors are less exposed to Russian risks than in the past, CNN said. This is because investment in Russia has already significantly decreased due to sanctions imposed on Russia after Russias annexation of Crimea in 2014. At the end of last year, JP Morgan estimated that Russia had about $40 billion of foreign currency debt, about half of which was held by foreign investors. However, according to the Bank for International Settlements, Russian companies owe about $121 billion in debt to international banks.
Even if interest on the 16-day Treasury bond is paid, Russias default crisis does not end. At the beginning of April, the bond maturing pays more than $2 billion in interest.
