Russia issued an ultimatum to creditors

The Ministry of Finance issued an ultimatum to holders of Russia's public debt in foreign currency. The department announced that it was ready to pay off the debt in rubles and would not interfere with its conversion into foreign currency if the holders had no claims against Russia in the future. This procedure for repayment of debts is reflected in the message of the Ministry of Finance.

The agency announced that holders of bonds (bonds) denominated in foreign currency will be divided into three types. The first type of creditors are the holders of securities, which can be determined without the participation of foreign depositories. We are talking about those bond holders who purchased them only through Russian depositories. The second group is Russian holders of securities, who acquired them, including through foreign depositories. They will have to go to the authorities and disclose their share of ownership in order to receive their payments. Finally, the third group is foreign holders of public debt.

It is they who are given an ultimatum. Firstly, all payments on securities will be credited to a special type “I” account with the National Settlement Depository (NSD). In order to receive them, the owners will have to apply to NSD on their own and prove their rights to this money. After confirmation of the fact of ownership, the funds can be transferred to accounts only in Russian banks and only after the bondholder signs a waiver "of all potential claims against the issuer in the future regarding the relevant payment."

All payments on bonds are translated into rubles. Representatives of the third group will be able to convert payments into the currency of interest to them and withdraw them abroad only after signing a waiver of claims. The exchange rate of ruble payments into foreign currency for the first and second groups is determined by the Central Bank rate on the date of payment, for the third group - on the date the funds are credited to the holder's account. The agency also transferred the first payments in the amount of 12.51 billion rubles (or $234.85 million) on bonds maturing in 2027 and 2047 to special accounts with NSD.

The Finance Ministry is thus trying to avoid a technical default on its Eurobond issues. It may come, because after the imposition of US and EU sanctions, Russia has lost the technical ability to service the public debt: all transfers in foreign currency are blocked by foreign participants, regardless of Russia's willingness to pay the bills.

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