The company missed a bond payment after being denied access to its foreign bank accounts
© Getty Images / Aleksandr Erastov / EyeEm
State-owned company Russian Railways has been ruled in default after failing to pay a bond coupon due on March 14. An attempted payment to shareholders was blocked last week by Western financial institutions.
The International Swaps and Derivatives Association (ISDA) announced on Monday that “a Failure to Pay Credit Event occurred in respect of [Russian Railways],” which effectively puts the company in default over the payment.
The company tried to pay the bond coupon, but the payment did not reach investors by the end of a 10-day grace period due to “legal and regulatory compliance obligations within the correspondent banking network.” This refers to sanctions placed on Russia following the launch of a military operation in Ukraine. Sanctions, among other things, blocked Russia’s accounts in the US, EU and some other countries, effectively denying Moscow an opportunity to conduct financial transactions with foreign institutions.
The ISDA’s decision comes amid speculation over whether Russia will default on two coupons on sovereign bonds, which it paid in rubles last week after attempts to pay them in dollars were blocked by the US Treasury.
Analysts say that Russia’s creditors may not accept ruble payments, which would put the country in default on its external debt for the first time in over a century, despite having sufficient funds to meet its obligations.
Russia has accused the US and other nations that are barring access to its foreign assets of engineering an “artificial” default.
For more stories on economy & finance visit RT’s business section
