Article Content Summary Technical difficulties related to sanctions… A police car is parked in St. Basils Cathedral Square in Moscow, Russia on the 4th. 2022.03.08.
[Seoul=Newsis] Reporter Yujabi = International credit rating agency Standard & Poors downgraded Russias credit rating from CCC- to CC, AFP news agency reported on the 17th.
With the technical difficulties related to international sanctions as the background, SP judges that Russias debt is very vulnerable to non-payment at this point. The outlook for Russia is negative.
The likelihood of a default this week appears to have decreased as Russia pays interest on government bonds in dollars, but SP is warning that risks persist.
Earlier, Russias Ministry of Finance announced that it had completed regular interest payments of $117 million on two dollar-denominated government bonds.
JP Morgan received approval from US authorities and was paid the day before, an official who requested anonymity said. JP Morgan sent the funds to Citigroup and the funds will be distributed to creditors, the official explained. The specific amount was not disclosed.
After the invasion of Ukraine, Western sanctions imposed restrictions on Russias ability to conduct business with US and European banks, and the payment process was intensively scrutinized. Global credit rating agencies have been warning of the possibility of a Russian default one after another.
The Russian government currently has about $40 billion in foreign currency debt, half of which is bought and held by foreign investors. JP Morgan estimates that Russian companies have $100 million in foreign currency debt.
Even if no payment was made this week, Russia has allowed a 30-day grace period. The U.S. Treasury Department said the sanctions would allow payments until at least the end of May. Russia appears to have avoided a default crisis this week, but the $2 billion bond maturities will return on the 4th of next month.
