Russia said it had paid interest on two sovereign dollar bonds yesterday, easing concerns about how it will manage its relationship with global investors.
Failure to pay could have led to the Kremlin’s first external bond default in more than a century and was regarded as a test of how it would respond to sanctions imposed by western governments following its invasion of Ukraine.
Foreign banks have claims of about $121 billion on Russian borrowers, according to the Bank for International Settlements.
Russia’s finance ministry said it had fully met its obligations on two bonds with $117 million interest, with funds sent to creditors.
Some European bondholders said they had received payments due in US dollars. Two creditors in Taiwan said the funds were in the process of being remitted.
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The coupons were due to be settled in New York on Wednesday but Russia had a 30-day grace period to pay in dollars before creditors could conclude a default had occurred. The last time Russia defaulted was after the 1917 revolution when the Bolsheviks failed to pay Tsarist debt.
Russia’s central bank kept its key interest rate at 20 per cent yesterday and warned of an imminent increase in inflation and a looming economic contraction. Last month it raised the key rate from 9.5 per cent to promote stability when the rouble crashed to record lows as the West imposed sanctions.
The bank said the country was entering “a temporary but inevitable period of increased inflation”, while flash indicators suggested a deterioration in the economy, which will shrink in the coming quarters. It did not give inflation or economic forecasts for this year.
Elvira Nabiullina, the bank’s governor, said: “The main uncertainty lies in the external conditions for trade under increased pressure from sanctions [which] have affected a significant part of our exports and imports.”
She added: “The decision of foreign companies to suspend operations on our market could also have a serious impact.”
