Moody's believes that Russia may be in a state of default as early as May 4

Payment by the Russian Federation of payments on European bonds in rubles, and not in US dollars, is considered by Moody's as a change in the conditions for issuing Eurobonds and may be considered a default if the situation is not corrected before the end of the grace period, that is, until May 4, according to the statement of this international rating agency.

Recall that earlier in April, the Ministry of Finance of the Russian Federation settled with holders of Eurobonds of the Rossiya-2022 and Rossiya-2042 issues maturing until April 4 in rubles after the US banned the use of frozen foreign exchange reserves to service external debt.

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“The terms of the issue of Eurobonds do not provide for provisions on the possibility of making payments in any currency other than the US dollar. Although Eurobonds issued after 2018 allow payments in rubles under certain conditions, bonds issued before 2018 (including Russia-2022 and Russia-2042 issues) either do not provide for such a change in the currency of payments, or allow payments only in other hard currencies (dollar, euro, pound sterling or Swiss franc),” the agency notes.

Moody's, therefore, believes that investors did not receive payments on Eurobonds promised by the terms of the issue within the appropriate period, the press release says.

Moody's withdrew the ratings of the Russian Federation on March 31 in connection with the EU ban on assigning ratings by EU credit rating agencies to the Russian Federation and local companies, as well as a ban on providing rating services to Russian clients.