Sunday, December 3

Fitch warns Russia that paying its debt in rubles is equivalent to a ‘default’

The agency of Fitch credit rating has warned that if Russia made in rubles paying your coupons debt issued in dollarswhose due date is scheduled for this Wednesday, “would constitute a sovereign defaultafter the 30-day grace period has elapsed.

“According to Fitch Ratings’ sovereign rating criteria, the local currency payment of Russia’s US dollar Eurobond coupons due March 16, if it were to occur, would constitute a sovereign default, upon expiration of the grace period of 30 days,” he said.

The Eurasian giant faces this Wednesday the first maturity of debt coupons issued in foreign currency since the promulgation on March 5 of the presidential decree that authorizes a differential treatment of foreign debt payments to creditors in countries hostile to Russia, including the payment in rubles of the debt.

debt interest

This Wednesday, Moscow will have to face the payment of 117 million dollars (105 million euros) corresponding to interest on your debt and, in case of not making the payment, it will have a grace period of 30 days before being declared the ‘default’the first such event for the country since it failed to pay its ruble-denominated debt in 1998 and the first time since 1918 in which it would not pay its debt in foreign currency.

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In this sense, Fitch Ratings has pointed out that if the coupon payments are not made in dollars, according to the original terms, the affected Russian issue notes would be reduced to category ‘D’ at the end of the grace period.

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Last week, Fitch Ratings had lowered the solvency note as the long-term issuer of Russia’s sovereign debt to ‘C’ from ‘B’ as a reflection of the “imminent” risk of default, after the Russian government approved on March 5 a decree that could potentially force the redenomination of the sovereign debt payments in foreign currency to local currency for creditors in specific countries.

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