(Bloomberg) -- Bondholders of Russian Railways JSC say they haven't yet received a coupon payment on euro-denominated bonds that they were expecting on Wednesday.
While the 23 million euro ($25 million) payment was due on Sunday, public holidays in Russia pushed the expected settlement date back to March 9. Still, bondholders say that there's no indication that the funds are en-route. They declined to be identified because they aren't authorized to speak publicly about the matter.
The Trans-Siberian railway operator would be the first Russian company to miss a debt payment in foreign currency since President Vladimir Putin decreed that investors in so-called hostile nations would only get paid in rubles. Russian Railways' bondholders aren't aware if a payment has been made in rubles in an account in Russia.
The uncertainty over the payment of the bond underscores the unprecedented nature of Russia's sudden financial isolation following its invasion of Ukraine. In the space of just two weeks, Russia has faced widespread international opprobrium, lost its investment grade status, witnessed the exodus of hundreds of foreign firms and become the most heavily sanctioned country in the world.
The notes were issued by RZD Capital PLC, an Ireland-incorporated entity. Russian Railways didn't respond to requests for comment.
Read More: Will Russian Bonds Default? There's Debate About That: QuickTake
Putin's Decree
Saturday's decree ruled that, under Russian law, payment in rubles at the central bank's official rate constitutes a legitimate transaction. But the bond documentation states that paying notes in a different currency without the consent of the creditors is widely considered a default.
Speaking on Thursday, Russia's finance minister Anton Siluanov said that foreign debt payments in foreign currency would take only place if Russia's central bank reserves are unfrozen.
Under the rules introduced on Saturday, debtors can ask a Russian bank to create a special “C” ruble-denominated account in the name of foreign creditors for settlement, while local creditors will be paid through Russian depositories.
Since the decree was signed, energy giants Gazprom and Rosneft have repaid bonds denominated in dollars. It's possible the payment order was made before the new rule was announced. State-owned finance leasing company GTLK has $14 million of interests due on Thursday from its $600 million bond maturing in 2027.
A payment can be delayed until 10 days after the due date, provided it's caused by a technical difficulty, according to the prospectus. The bonds have a 45-day grace period after missing a coupon payment before it is considered a default, the bond document also said.
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Gazprom Is Said to Make $1.3 Billion Debt Payment in Dollars (3) Russia's Rosneft Is Said to Repay $2 Billion Bond in Dollars (1) |
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