Russia Says Sanctions Determine If Foreign Bondholders Get Paid

(Bloomberg) -- Sanctions imposed on Russia will determine if international investors are able to collect debt payments on sovereign bonds denominated in foreign currencies, according to the Finance Ministry in Moscow.

Residents will receive their payments on the Russian state debt in rubles regardless of the denomination currency, the ministry said in an emailed statement on Sunday. 

But payments to foreign investors will depend on sanctions introduced against Russia and “exemptions established by the relevant licenses and permits,” according to the statement. 

All debt will be serviced on time and in full amounts, the ministry said. 

Read more: Putin Aims to Avert Defaults With Ruble Payment to Creditors

President Vladimir Putin signed a decree on Saturday allowing Russia and Russian companies to pay foreign creditors in rubles as a way for the government to stave off defaults while capital controls remain in place.

Russian corporate bonds denominated in foreign currencies have plunged to deeply distressed levels in recent days as investors weighed the impact of sanctions imposed on the country in the wake of its invasion of Ukraine. 

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