Russia to service foreign debt in roubles, ministry says By Reuters

© Reuters. FILE PHOTO: A vendor counts Russian ruble banknotes at a market in Omsk, Russia February 18, 2022. REUTERS/Alexey Malgavko

(Reuters) – Russia will service its external debt in roubles, which can be converted into the currency of the original Eurobonds at a later date, the finance ministry said on Wednesday, as a key waiver of United States allowing Moscow to pay its foreign debt has expired.

The U.S. Treasury Department authorized a waiver to expire at 12:01 a.m. ET (0401 GMT) on Wednesday, preventing Russia from making interest and maturity payments on its sovereign debt to U.S. persons.

“The decision…primarily undermines the rights of foreign investors in Russian debt securities and undermines confidence in Western financial infrastructure,” the finance ministry said in a statement.

Last week, Russia rushed forward payments on two international bonds – one denominated in euros and the other in dollars – ahead of the May 27 settlement date and when the waiver was due to expire.

Nearly $2 billion in payments on Russian international bonds are due before the end of the year. The ministry reiterated on Wednesday that it would continue to honor its external obligations but in roubles, which could later be converted into the original bond currency through the National Settlement Depository (NSD).

“Payments using foreign financial intermediaries will be made to the Type C accounts of those financial intermediaries … with an option to restore access to these funds for investors who have submitted proven written rights for such payments in the future “said the Ministry of Finance. mentioned.

Moscow has temporarily banned foreign investors from countries that have backed sanctions against it from selling their assets held in Russia and receiving payments on domestic ruble bonds, until the sanctions are lifted.

Coupon payments on sovereign debt instruments are made to special type C accounts at the NSD and held there until Western sanctions and Moscow countermeasures are lifted. The NSD did not immediately respond to a request for comment from Reuters.

“The current situation has nothing to do with (the default) of 1998, when Russia ran out of funds to repay its debts. Today there is money and a willingness to pay,” said the Finance Minister Anton Siluanov in the statement.

Shirlene J. Manley