Russia pays sovereign debt in rubles

Russia’s Finance Ministry announced on Thursday it has settled two issues of dollar-denominated Eurobonds “in full” by sending 12.51 billion rubles ($234.5 million) in coupon payments to the National Settlement Depository (NSD). It’s the first payment made under a new mechanism, which enables transactions in rubles.

According to the ministry, the payments were on Eurobonds maturing in 2027 and 2047.

“Thus, obligations on servicing the state securities of the Russian Federation were fulfilled by the Finance Ministry in full,” the statement said.

Finance Minister Anton Siluanov argued that the transition to ruble payments does not imply a debt default. The US has prevented Russia from making debt payments in foreign currency, and last month Washington ended a bond payments waiver, intending to stop Russia from servicing its sovereign debt. Moscow has accused Washington of trying to engineer an artificial default, as the country has the funds to pay its debts.

READ MORE: Russia sets rules for foreign debt payments

Thanks to the new mechanism, Russia will be able to fulfil its obligations not only to creditors whose rights are confirmed through the national depositories, but also to those “who cannot transfer funds under standard procedures,” the ministry said.

Investors will need to open a ruble account to receive the funds, it explained.

On Wednesday, President Vladimir Putin signed a decree on a temporary procedure for Eurobond payments. The document states that Moscow will now consider its obligations completed “if they are fulfilled in rubles in an amount equivalent to the value of obligations in foreign currency” at the exchange rate on the day the funds are transferred to the central depository (NSD), through which they will be paid to creditors.

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