Russia failed to pay its foreign debt (default) for the first time since 1918 after missing a deadline on Sunday (June 26).
The onslaught of sanctions from Western countries has made it difficult for Russia to repay debts to international creditors even if they have the money to do so.
The Kremlin is supposed to pay $ 100 million in interest on two bonds, each of which is in U.S. dollars and euros on May 27th. The payment has a grace period of 30 days, which expires on June 26 or Sunday.
According to Russia, the payment was made to Euroclear, a bank that will distribute the payments to investors.
However, the money was stuck there and the creditors had not received it within that period, causing Russia to be considered a defaulter.
The failure seems inevitable not to mention after the U.S. Treasury decided to end a special exemption that allows Russia to pay interest to its investors on May 25th.
As a solution, President Vladimir Putin announced all future debt payments would be made in rubles through a Russian bank, National Settlements Depositry, although the contract required it to pay in dollars or other international currencies.
Even so, without an exact deadline specified in the prospectus, lawyers said Russia may have until the end of the next business day to pay bondholders.
The last time Russia failed to pay its foreign debts was in 1918, during the Bolshevik Revolution when the new leader at the time, Vladimir Lenin refused to pay the debts of the Russian Empire.
Meanwhile in 1998, Russia failed to pay its domestic bond payment debts when the country was rocked by the ruble crisis, but managed to pay off its foreign debts.
