Russia defaults on foreign debt for first time in a century
Russia has defaulted on its overseas debt for the first time in more than a century after missing a deadline, said the BBC today citing media reports.
Russia has the money to make a $100m payment and is willing to pay, but sanctions made it impossible to get the sum to international creditors.
The Kremlin had been determined to avoid the default, which is a major blow to the nation's prestige, said the BBC.
The Russian finance minister branded the situation "a farce".
The $100m interest payment was due on 27 May. Russia says the money was sent to Euroclear, a bank which would then distribute the payment to investors.
But that payment has been stuck there, according to Bloomberg News, and creditors have not received it, according to the BBC news article.
Meanwhile, some Taiwanese holders of Russian bonds denominated in euros have not received interest payments, according to the Reuters news agency, which cited two sources.
The money had not arrived within 30 days of the due date, that is, Sunday evening, and so is considered a default.
Euroclear would not say if the payment had been blocked, but said it adhered to all sanctions.
Although default is a symbolic blow, it will have few immediate practical consequences for Russia.
Defaulting nations usually find it impossible to borrow any more money, but Russia is already in effect barred from borrowing in Western markets by sanctions.
In any case, it is reportedly earning about $1bn a day from fossil fuel exports, and Russian Finance Minister Anton Siluanov said in April the country had no plans to borrow more.
The last time Russia defaulted on its foreign debt was in 1918, during the Bolshevik Revolution when the new communist leader Vladimir Lenin refused to pay the debts of the Russian Empire.
Russia's last debt default of any kind was in 1998 as the country was rocked by the rouble crisis during the chaotic end of Boris Yeltsin's regime. At the time Moscow failed to keep up payments on its domestic bonds but managed not to default on its overseas debt.
Russia has seemed on an inevitable path to default since sanctions were first imposed by the US and European Union following the invasion of Ukraine.
These restricted the country's access to the international banking networks which would process payments from Russia to investors around the world.
About $40bn of Russia's debts are denominated in dollars or euros, with around half held outside the country, added the BBC report.
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