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Started By
Message
Russia slides into historic debt default as payment period expires
Posted on 6/27/22 at 9:49 am
Posted on 6/27/22 at 9:49 am
Only because their payments in rubles aren’t allowed to clear:
Things could get more interesting.
CNBC
quote:
Russia has entered its first major foreign debt default for over a century, after a grace period on two international bond payments lapsed on Sunday night.
Interest payments totaling $100 million were due on May 27 and subject to a grace period which expired on Sunday night. Several media outlets have reported that bondholders have not received the payments, after Russia’s attempts to pay in its ruble currency were blocked by international sanctions.
The Kremlin has rejected the claim that Russia is in default, with spokesperson Dmitry Peskov reportedly telling a press call this morning that Russia made the bond payments due in May but they have been blocked by Euroclear due to Western sanctions, rendering the non-delivery of payments “not [Russia’s] problem.”
Things could get more interesting.
CNBC
14
Posted on 6/27/22 at 9:50 am to TerryDawg03
And...what? Does this really hurt Russia, or does it just hurt the countries that hold the debt and aren't accepting the payments?
Posted on 6/27/22 at 9:51 am to TerryDawg03
quote:
after Russia’s attempts to pay in its ruble currency were blocked by international sanctions.
seems to me like third parties are interfering with Russia's efforts to meet its obligations.
I'd be damned careful about taking adverse actions in response to this "default"
Posted on 6/27/22 at 9:52 am to TerryDawg03
Seems Russia is in the right, if the debt holder doesn’t accept payment, then case closed.
Posted on 6/27/22 at 9:54 am to TerryDawg03
I’d just pull the whole “pay your traffic ticket in quarters” move on them 
Posted on 6/27/22 at 9:55 am to Padme
quote:
if the debt holder doesn’t accept payment, then case closed.
wouldn't that depend on the wording of what constitutes legal tender?
Posted on 6/27/22 at 9:56 am to TerryDawg03
This is like me trying to pay my Amex for goods already purchased and Amex won't take my payment. And that hurts me?
This post was edited on 6/27/22 at 9:57 am
Posted on 6/27/22 at 9:56 am to Padme
quote:
Seems Russia is in the right, if the debt holder doesn’t accept payment, then case closed.
Unless the Bond contract says you make bond payments in USD...its a technical term called a contract.
Posted on 6/27/22 at 9:57 am to TerryDawg03
Biden will call it student loan debt and forgive it. Problem solved.
Posted on 6/27/22 at 9:57 am to ChineseBandit58
Yeah, but if they’ve used the rubble in the past and it was accepted, isn’t that already an indirect acceptance of the rubble as legal tender? Just asking, as I have no knowledge of matters
Posted on 6/27/22 at 10:00 am to TerryDawg03
Russia was 100% in the know the contracts of the bonds specify payment in dollars, so they could not legally accept any other currency.
Reading is fundamental. Don't like the terms, don't sign.
Reading is fundamental. Don't like the terms, don't sign.
Posted on 6/27/22 at 10:00 am to Lakeboy7
quote:
Unless the Bond contract says you make bond payments in USD...its a technical term called a contract.
What does the "contract" say and how do sanctions alter it?
The irony here is Russia is not getting further hurt by this. With sanctions in place it's not like they can sell bonds to western interest currently. So the only people getting hurt by this are current Russian bond holders in the west.
Posted on 6/27/22 at 10:02 am to ChineseBandit58
quote:
wouldn't that depend on the wording of what constitutes legal tender?
You think the country of Russia entered into an agreement that doesn't consider the ruble to be "legal tender?"
Posted on 6/27/22 at 10:05 am to GumboPot
quote:
The irony here is Russia is not getting further hurt by this.
Their bond rating in west is shot, done. They will never borrow money from a western bank in the foreseeable future.
Posted on 6/27/22 at 10:08 am to Lakeboy7
quote:
The irony here is Russia is not getting further hurt by this.
You're stupid.
This post was edited on 6/27/22 at 10:11 am
Posted on 6/27/22 at 10:09 am to beerJeep
quote:
I’d just pull the whole “pay your traffic ticket in quarters” move on them
That's kind of what Russia did. They made the payments. In their currency. Unless their agreement mandated that they pay in another currency, they aren't in default.
Posted on 6/27/22 at 10:11 am to TerryDawg03
Just some perspective here. From a western perspective this would seem to hurt Russia. It doesn't. Russia does not have to sell bonds to the west. 80% of the rest of world is allowed to buy Russian debt
Posted on 6/27/22 at 10:12 am to Lakeboy7
quote:
Their bond rating in west is shot, done.
Oh no! What will they do?
Posted on 6/27/22 at 10:13 am to GumboPot
I think I heard there are American pension funds that depend on those payments? If so, I'm sure they're thrilled.
Posted on 6/27/22 at 10:15 am to TerryDawg03
It is important to note that the only organizations labeling this development as a default are media outlets. The bond holders have not declared the debts in default. Obviously, the bond holders want to get paid. Russia paid the amounts in full in rubles due to artificial means of refusal of payment acceptance.
I expect some solution to be reached or international legal proceedings to commence. It’s a fascinating legal issue. In such proceedings I would expect critical factors such as intent to pay and possession of adequate amounts of payment to be factors.
For now, the notion of default is symbolic rather than legal.
I expect some solution to be reached or international legal proceedings to commence. It’s a fascinating legal issue. In such proceedings I would expect critical factors such as intent to pay and possession of adequate amounts of payment to be factors.
For now, the notion of default is symbolic rather than legal.
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