Connect with us

Latest News

Teetering on default, Russia misses $1.9 million payment, committee determines

Published

on

  • Russia fails to pay $1.9 million in accrued interest on a dollar bond.
  • Failure expected to trigger payouts potentially worth billions of dollars.
  • Sanctions on Russia have excluded it from global financial system. 

NEW YORK/LONDON: Russia’s failure to pay $1.9 million in accrued interest on a dollar bond will trigger payouts potentially worth billions of dollars, a panel of investors determined on Wednesday, as the country teeters on its first major external debt default in over a century. 

Sanctions imposed by western countries and their allies on Russia following its invasion of Ukraine on February 24, as well as countermeasures by Moscow, have all but excluded the country from the global financial system. 

The lapse last month of a key US license allowing Russia to make payments put the prospect of the country defaulting back into focus. 

A Credit Derivatives Determinations Committee (CDDC) overseeing Europe, whose members are banks and asset managers, said on its website on Wednesday that it voted “yes” to a question on whether a “failure to pay credit event” occurred with respect to Russia.

Citibank was the sole “no” vote, while 12 other members voted “yes”.

Russia’s international 2022 bond matured on April 4 and payment of principal and interest due at maturity was not made until May 2. During that period, Russia was obligated to continue to pay interest which a holder calculated at $1.9 million. 

The CDDC was then asked to determine if Russia’s non-payment constituted a failure to pay that would trigger payouts for insurance against a default, or credit default swaps (CDS).

The committee, whose members also include Goldman Sachs, Bank of America, Deutsche Bank, Elliot Management and PIMCO, agreed that the failure to pay happened on May 19 and that a request to find a resolution was submitted on May 26. Citi again voted ‘no’.

The committee will meet again on June 6 at 2pm London time (1300 GMT) to continue the process, which could move to set up an auction to determine any CDS payouts.

There are currently $2.54 billion of net notional CDS outstanding in relation to Russia, including $1.68 billion on the country itself and the remainder on the CDX.EM index, according to JPMorgan calculations.

A default for the purposes of CDS contracts “occurs once the determination committee votes for a credit event, which has now happened,” said Gabriele Foa, portfolio manager of the Global Credit Opportunities Fund at Algebris.

“Of course […] it is a very small amount, so the definition of default is very technical. If, as it seems, it is not possible for foreign investors to receive dollars starting May 25, the default will soon be more material.”

The focus for a wider default is now on a coupon payment due June 24 on a bond issued in 1998.

Russia has under $40 billion of international bonds outstanding and close to $2 billion in payments are due through year-end.

The country has the means to avoid default, with nearly $650 billion of available gold and currency reserves prior to the Ukraine invasion, which it calls a “special military operation”, and makes billions of dollars a week selling oil and gas.

Russia’s Finance Minister Anton Siluanov said last month that Moscow will service its external debt obligations in roubles if the United States blocks other options and will not call itself in default as it has the means to pay. Not all bonds allow for payment in roubles, however.

Russia has said it could extend a scheme used for its gas payments to sovereign bondholders, allowing Eurobond investors to open Russian FX and rouble accounts. The money would be channelled through Russia’s National Settlement Depository (NSD), which is not under Western sanctions.

Russian dollar-denominated bonds rose between 1 cent and 2.5 cents on Wednesday, Refinitiv data show. They are in the very distressed territory, ranging in price from 30 cents on the dollar to as low as 19 cents.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Latest News

May 9 tragedy: Anchors reflect on loss and condemn memorial desecration.

Published

on

By

As the nation commemorates the one-year anniversary of the tragic events of May 9, anchors from various media platforms shared their moving views on the significance of the day and the martyrs’ enduring impact.

“The martyrs of any nation are the crown of that nation,” stated one anchor, evoking the great reverence and respect showered upon those who make the ultimate sacrifice for their country.

Another person confirmed their sentiment, stating that nations’ development and progress are inextricably linked to the blood poured by their martyrs.

Anchors paid respect to the fallen heroes’ heroism, emphasising the deep sacrifices made by those who gave their lives in service to the nation. “Martyrs have sacrificed everything for the sake of the country,” stated one anchor, their comments echoing the gratitude felt by millions across the nation.

Nonetheless, amid the mournful memory, anchors expressed outrage about the vandalism of the martyrs’ memorials on May 9. “On May 9, some miscreants burned the memorials of their martyrs to fulfil the nefarious purposes of unknown people,” shouted one anchor, criticising the brazen act of disrespect.

As anchors reflected on the nefarious goal behind the attack on the country’s installations, the question of motive loomed big. “Who did we please by attacking the country’s installations, and what kind of protest was it?” asked one anchor, emphasising the importance of accountability and justice.

Anchors emphasised the importance of quick and decisive action, calling for all those engaged in the desecration to face justice. “All those involved in such mischief must be brought into the Kfir role,” said an anchor, unwavering in the face of such heinous deeds.

Amid the condemnation, anchors underlined the great debt owed to the martyrs who gave their lives for Pakistan. “Martyrs have sacrificed their lives for this land of Pakistan, which is their favour to us,” acknowledged one anchor, their comments a sad reminder of the debt owed to those who have given everything for their country.

As the country reflects on the events of May 9, anchors emphasise the necessity of remembering and commemorating the martyrs’ sacrifices. “Nations that forget their benefactors are obliterated by the attributes of history,” warned one anchor, emphasising the timeless need to preserve the memory and legacy of those who have made the ultimate sacrifice.

Anchors were together in condemning anyone who would strive to undermine the nation’s unity and strength, taking a firm position against any danger to national integrity.

“Anyone who would assault our national integrity under the pretence of protest is in no way forgivable,” said one anchor, their comments a clear call to unity and vigilance in the face of adversity.”

Finally, as the nation honours and pays tribute to the May 9 martyrs, anchors emphasise their unshakeable commitment to honouring their memory and upholding the principles for which they fought so heroically. “To the extent that army men sacrifice for us, they have no personal gain,” declared one anchor, capturing the attitude of selflessness and sacrifice that marks Pakistan’s martyrs’ legacy.

Continue Reading

Latest News

Families of army martyrs want justice for the May 9 mayhem.

Published

on

By

As the nation commemorates the sombre anniversary of the May 9 tragedy, the families of the dead martyrs continue to deal with tremendous loss and a sense of injustice.

One year after the heartbreaking events, their anguish is apparent, and their tears attest to the lasting pain of loss.

The relatives of the martyrs expressed their feelings in emotional professions of love and remembrance, their voices filled with emotion. “I am proud that Allah chose my son for martyrdom,” remarked the mother of Captain Taha Hashmi Shaheed, echoing her son’s steadfast dedication and sacrifice.

However, despite their pride, worries about the legacy of those who gave their life for their country persist. “Did the sacrifices of these martyrs go in vain?” said another weeping mother, her pain echoing that of countless others who have lost loved ones.

For the families, the destruction of the memorials created in memory of the dead soldiers on May 9 was an inexcusable act of contempt. “The desecration of the martyrs’ memorials on May 9 was intolerable,” lamented Captain Mohammad Aqib Javed Shaheed’s sister, her grief obvious in her words.

Calling for justice, the families encouraged the government to take immediate and decisive action against those guilty for the tragic events of May 9. “I appeal to the government to take strict action against those responsible for May 9,” Captain Mohammad Aqib Javed Shaheed’s sister pleaded, echoing many others’ feelings.

The families felt great betrayal, and their faith was challenged by the conduct of individuals who desecrated the memory of their slain heroes. “The tragedy that happened on May 9 is highly condemnable,” said Naik Islam Kashif Zuberi Shaheed’s sister, her words tinged with disbelief and outrage.

Continue Reading

Latest News

Another IHC court orders contempt action against nasty campaign.

Published

on

By

Another letter has emerged from the Islamabad High Court, highlighting a rising trend of aggressive campaigns against the court.

Justice Mohsin Akhtar Kayani has also written to the IHC chief justice, requesting him to file contempt of court proceedings against individuals involved in the alleged smear campaign.

This event follows a similar letter delivered yesterday by Justice Babar Sattar to the chief justice of the Islamabad High Court, suggesting a concerted effort among judges to address what they see as an attack on the judiciary’s integrity and authority.

According to officials in the judiciary, Justice Mohsin Akhtar Kayani emphasised the importance of taking action against anyone guilty for spreading misinformation or engaging in activities that are considered contemptuous of the court.

In response to Justice Sattar’s letter, the Supreme Court issued a significant ruling on Monday regarding the judge’s social media campaign. The court has announced that contempt proceedings will be initiated in response to the alleged hostile campaign against Justice Sattar.

According to reports, Justice Babar Sattar wrote a letter to IHC Chief Justice Aamir Farooq about a social media campaign against him. The court then decided to treat the letter as a contempt of court action.

Continue Reading

Trending