Russia said on Friday it had made dollar payments on its US-denominated debt as the country faces Western sanctions for its offensive in Ukraine, raising fears of a default.
The finance ministry said in a statement that it had made payments totaling $650 million on two bonds due in 2022 and 2042 “in the currency of issue of the eurobonds: the US dollar.”
In early April, Moscow had tried to settle a dollar debt in rubles, as the US Treasury Department no longer allows repayment of its debt with dollars held in US banks.
As a result, the financial rating agency S&P Global Ratings lowered Russia’s rating for its foreign currency payments to the “selective default” level. The rating for foreign currency payments was downgraded to “SD” (last notch before “D” for default), while the rating remained at “CC” for ruble payments.
For its part, S&P indicated that it was failing to rate Russia, as well as agencies Fitch and Moody’s.
Russian Central Bank President Elvira Nabioullina assured the press on Friday that “we cannot talk about default”, although she acknowledged that Moscow faces “payment difficulties”.
Russia defaulted on domestic debts in rubles during the 1998 financial crisis, but has not defaulted on its foreign debt since 1918, when Bolshevik leader Vladimir Lenin refused to recognize the debt inherited from the tsarist regime overthrown in the 1917 revolution.
