Russia has to pay interest on its debt in dollars
23:40
Russia should pay off $117 million in interest on bonds issued in dollars on Wednesday. If it does not, the market may consider it insolvent. Russia's debt to pay is interest on bonds issued in 2013. Experts quoted by Reuters say that it will be the most closely watched repayment operation at least since Greece's settlements with creditors in the so-called debt crisis in the euro area more than ten years ago.
This includes because Russia may have a debt service problem due to the sanctions that have been imposed on that country. Most Russian banks are cut off from SWIFT, the transaction information exchange system. But much more painful is the ban on operations with the Russian central bank and the Russian Ministry of Finance, which precludes direct interest payments.
Failure to pay interest on the debt could be considered bankruptcy of the country – but in fact, Russia is not yet going bankrupt today. For example, during the grace period in such situations: the debtor country has 30 days from the agreed repayment date to settle its obligations.
"The insolvency issues are never straightforward, and this one is no exception. We have a grace period, anything else can happen," Guido Chamorro, Pictet's Emerging Markets Portfolio Manager, said.
