Moody’s: Russia could face credit default for ruble payments

A tip on the floor of the New York Stock Exchange in New York on Tuesday, Jan. 25, 2022. Moody’s said Friday that Russia was on the verge of defaulting on its debts for not using U.S. dollars. File photo by John Angelillo/UPI | License picture

April 15 (UPI) — Russia has moved closer to defaulting on its debts due to its switch to payment in rubles instead of US dollars, rating agency Moody’s said.

The agency said that unless Russia returns to making dollar payments in accordance with its loan agreements by May 4, creditors will be able to claim insurance refunds while damaging the country’s financial reputation. country.

Russia has disputed that current agreements prevent it from repaying ruble loans.

“Russia would have made payments on two bonds maturing in 2022 and 2042 in rubles rather than US dollars, which represents a change in payment terms from the original bond contracts and can therefore be considered as a default by Moody’s definition if not cured by May 4, which is the end of the grace period,” Moody’s said, according to The Guardian.

“The bond contracts do not provide for any reimbursement in a currency other than the dollar.”

Earlier this week, S&P Global placed Russia in a “selective default” rating after the Russian government repaid around $650 million of debt in rubles instead of dollars. S&P said it does not expect investors to be able to convert ruble payments to US dollars equivalent to the original amount owed.

S&P said Russia has 30 days to repay its US dollar loans to avoid defaults.

Russia’s finance ministry, however, said it considered the debts paid “in full” with its ruble transaction and believed it had not broken the rules.

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