Russia will likely default with April 4 payment due of $2.2 billion, experts say
Investors breathed a sigh of relief last week after the Russian government made a $117 million interest payment on its foreign debt. But a much bigger payment comes due April 4 — to the tune of $2.2 billion — and creditors are far less optimistic Russia will pony up this time.
“The last payment was a small investment in credibility, but when Russia has to start writing billion dollar checks it’s a different calculation,” Jay Newman, former Elliott Management portfolio manager and author of “Undermoney,” told The Post. “I don’t think it’s realistic that Russia comes up with the $2.2 billion.
The bond payment last week panicked investors because it was unclear whether Russia’s central bank would be able to able to use its frozen reserve of US dollars to make the payment — and whether US banks would work with the country to transfer the money. There was also a dispute about whether Russia could pay the debt in its own currency. The Russian Finance Ministry insisted the country could pay in rubles RUBUSD, -1.68% but people with knowledge of the contract say it’s required to be paid in dollars.
For some smaller installment payments Russia is allowed to pay in rubles. But for the previous payments of $117 million and the upcoming payment of $2.2 billion, the terms mandate Russia must pay in US dollars.
https://www.marketwatch.com/story/russia-will-likely-default-with-april-4-payment-due-of-2-2-billion-experts-say-01648317115