Page 52 - RusRPTJul22

Analysts say the case is almost unique as there has never been a default when a country both has the money and is willing to pay. The Russian government intends to challenge the designation of default in court in a case that is likely to run for years.
According to Russian Finance Minister Anton Siluanov, the United States and the European Union are cooking up fictitious obstacles to servicing Russia's foreign debt in order to "put the 'default' label on it.
"These allegations of a default are absolutely unjustified, because back in May, the obligatory payment in the currency was fulfilled, and the fact that Euroclear withheld this money, or did not deliver it to the recipients is no longer our problem," he told reporters.
The Russian Finance Ministry reported on May 20 that it had made the payment under Eurobonds maturing in 2026 in the amount of $71.25mn and in 2036 in the amount of 26.5mn. Nevertheless, bondholders did not receive the money by May 27, Bloomberg reported.
The Russian Finance Ministry denies any default. "In accordance with issuing documentation for mentioned issues, the event of default is the failure to pay on the part of the debtor, but the payment was made in advance - on May 20, 2022. In this case, the failure of investors to receive funds occurred through third party action and not as a result of the failure to pay, which is not expressly provided in issuing documentation and should be considered within the framework of the general norms of law governing conditions of the issue, with consideration of all the circumstances and good faith in the actions of the parties," the Ministry stated as cited by Tass.
The ministry of finance complains that the West is deliberately trying to block Russia’s attempts to pay its obligations. Russia’s bond paying agent for sovereign Eurobonds maturing in 2023, 2028, 2042 and 2043 has already transferred these payments to Russia’s National Settlement Depository (NDC) in early June. However, none of these payments are likely to go through after the EU added the NDC to the sixth package of sanctions the same month.
Russia has been trying to sidestep the ban on using dollars to pay international debt obligations by introducing the same scheme as the rubles-for-gas deal, whereby Russia sets up two parallel accounts in rubles and dollars so that it can deposit rubles for the payments, which are then converted to dollars and sent on to bondholders.
On June 22, Russian President Vladimir Putin issued an executive order, whereby Moscow views its Eurobond payment obligation as honoured "if they are made in rubles in the amount equivalent to the value of foreign currency commitments" on the day the funds are transferred to the NDC. The first such
52 RUSSIA Country Report October 2020 www.intellinews.com