Moody’s Investors Service said on Thursday that Russia “could be considered in default” if it does not pay two US dollar-denominated bonds by May 4 at the end of a grace period.
Moscow paid in rubles to repay its debt after it was blocked from using foreign currencies as a result of sanctions that cut the country off from the global financial system after Moscow’s invasion of Moscow.
But the April 4 payment in rubles on two foreign currency bonds maturing in 2022 and 2042 “represents a change in payment terms… a statement.
“The bond contracts have no provision for repayment in currencies other than dollars,” Moody’s said.
The decision came days after S&P Global Ratings declared Russia in “selective default” for failing to pay bondholders in US currency.
For several weeks, Russia avoided the risk of bankruptcy as the US Treasury Department allowed the use of foreign currency held abroad to pay off foreign debt.
Last week, Washington banned Moscow from paying debts with dollars held by US banks.
Russia’s finance ministry said it was forced to make about $650 million in repayments to foreign debtors in rubles as they mature on April 4.
Finance Minister Anton Siluanov said earlier this week that the government will “go to court” if it defaults, as it has done everything it can to repay the debt.
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