Teetering On Default, Russia Misses $1.9M Payment, Investor Panel Says

Russia's failure to pay $1.9 million in accrued interest on a dollar bond will trigger payouts potentially worth billions of dollars, a panel of investors determined on Wednesday as the country teeters on its first major external debt default in over a century, Rodrigo Campos and Jorgelina Do Rosario reported for Reuters.

Photo Insert: The Russian economy is barely keeping afloat amidst a deluge of Western sanctions unleashed in response to its invasion of Ukraine.

Sanctions imposed by Western countries and their allies on Russia following its invasion of Ukraine on Feb. 24, as well as countermeasures by Moscow, have all but excluded the country from the global financial system.

The lapse last month of a key US license allowing Russia to make payments put the prospect of the country defaulting back into focus, Reuters added.

A Credit Derivatives Determinations Committee (CDDC) overseeing Europe, whose members are banks and asset managers, said on its website on Wednesday that it voted “yes: to a question on whether a "failure to pay credit event" occurred with respect to Russia. Citibank was the sole “no” vote, while 12 other members voted “yes.”

Russia's international 2022 bond matured on April 4 and payment of principal and interest due at maturity was not made until May 2. During that period, Russia was obligated to continue to pay interest which a holder calculated at $1.9 million.

The CDDC was then asked to determine if Russia's non-payment constituted a failure to pay that would trigger payouts for insurance against a default, or credit default swaps (CDS).

The committee, whose members also include Goldman Sachs, Bank of America, Deutsche Bank, Elliot Management, and PIMCO, agreed that the failure to pay happened on May 19 and that a request to find a resolution was submitted on May 26. Citi again voted “no.”

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