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Russia says sovereign bond payments depend on sanctions -Breaking

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© Reuters. FILE PHOTO – This illustration was taken February 24, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Guy Faulconbridge

LONDON (Reuters] – Russia’s payments of sovereign bonds to non-residents are dependent on West sanctions, Russia’s finance ministry stated on Sunday. This stokes fears that Russia could default on tens or billions in eurobonds.

Although the ministry stated that it would pay its sovereign debts promptly and fully, payments will depend on sanctions placed on Russia by the West for the invasion.

According to a statement by the Finance Ministry, “The possibility of paying such money to non-residents is dependent on the restrictions imposed in relation the Russian Federation”

According to the ministry, if payments are not made due to restrictions by Russia’s government, payment would follow a Presidential Decree from March 5.

The ministry stated that Russia would use rubles to pay residents for bonds in foreign currencies from now on.

According to it, “Payments for such Russian Federation securities in foreign currencies will be made by residents in the Russian Federaton’s corresponding currency on the date they are paid.”

Moody’s cut Russia’s credit rating (NYSE:), to Ca on Sunday. The reason was central bank capital control measures that could limit foreign debt payments and result in default.

Moody’s claimed that its decision was based on “severe concern over Russia’s willingness, and ability, to repay its debt obligations”.

Rating agency stated that default risks have increased, and foreign bondholders may only recoup a portion of their investments.

Moody’s and its peers Fitch and S&P Global (NYSE:) had scored Russia at investment-grade levels of Baa3/BBB as recently as March 1. They have all since lowered their ratings several times, pushing Russia’s sovereign default into what is now called “junk.”

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