Some creditors receive interest in dollars in Russia
According to Reuters on the 17th, JP Morgan Chase Bank of the United States received interest on government bonds paid by Russia and processed it according to a set procedure. This is a picture of JP Morgans headquarters in New York, USA. [AFP = Yonhap News] Russias credit rating, which is on the brink of bankruptcy for the first time in a century, has fallen again. It paid interest in dollars to some creditors, but that didnt prevent credit deterioration.
International credit rating agency Standard & Poors downgraded Russias national credit rating by one more level from CCC- to CC on the 17th. CC stands for Restricted Default. S&P noted that the risk of default is growing as Russia faces technical difficulties in remittances to investors due to Western sanctions.
Wells Fargo strategist Brendan McKenna told Bloomberg that the downgrade meant Russia was on the verge of default, reflecting a weakening of Russias ability to repay its debt. Earlier this month, Fitch and Moodys also sharply downgraded Russias credit rating, citing concerns about Russias ability to pay its debts.
Russia paid interest on government bonds in dollars to some creditors, Reuters reported. A creditor told Reuters that the interest was paid in dollars, contrary to my expectations. An official in the financial sector said that customers who held Russian government bonds received interest. JP Morgan, a Russian currency trading bank, processed money sent by the Russian government to pay interest on government bonds and deposited it into its payment agent, Citigroup, a source told Reuters.
Even if this default crisis passes, Russias national default crisis does not disappear. On the 4th of next month, the $2 billion bond is due again. JPMorgan strategist Johnny Gulden said that even if a payout is made this week, investors will need to watch for the next payout as future payouts may be treated differently. The United States has banned transactions between its financial institutions and the Russian central bank and the Ministry of Finance under sanctions against Russia, but it does allow an exception to allow Russian bondholders to collect interest. The exception is only allowed until May 25, the U.S. Department of the Treasurys Office of Foreign Assets Control said.