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NEW YORK, March 15 (Reuters) – Rating agency Fitch said on Tuesday that if Russia were to pay two U.S. dollar bond coupons due Wednesday in rubles, it would constitute a sovereign default after a grace period expired. .
Russia’s invasion of Ukraine last month triggered global sanctions that limited Moscow’s ability to access and allocate cash.
“Payment in local currency of Russian dollar Eurobond coupons due on March 16 would, if it were to occur, constitute a sovereign default, upon expiry of the 30-day grace period,” Fitch said in a statement.
Russia is due to make two hard currency coupon payments of nearly $117 million on Wednesday.
If paid in roubles, Fitch said, both bonds’ ratings would be downgraded to “D” after the grace period expires, while Russia’s long-term foreign currency rating would be set to “Restricted Default”. “.
Fitch said the “C” rating in local currency is consistent with Russia not crediting foreign investors with local currency bond coupons that were due on March 2.
“We understand that the Russian Ministry of Finance made these coupon payments on OFZ 2024 to the National Settlement Depository, but they were not paid out to foreign investors due to restrictions from the Central Bank of Russia,” Fitch said. .
“This will constitute a default if not cured within 30 days of the payment being due.”
Fitch said it applies a 30-day grace period to local bonds, called OFZs, even though these are not detailed in the bond documents.
Reporting by Rodrigo Campos; edited by Jonathan Oatis and Tim Ahmann
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