Russia may have gone bankrupt as it made dollar-denominated bond payments,
According to Reuters, “Russia has reportedly made payments on two bonds maturing in 2022 and 2042 in rubles instead of US dollars, which is a change in the terms of payment compared to the original bond contracts and can therefore be considered “how it defaults obligations according to Moody’s definition, if it does not make corrective actions until May 4, when the grace period expires”, she states in a statement.
Moody’s said that while some Russian bonds issued after 2018 allow payments in rubles under certain conditions.
However, the disputes issued before 2018 and expiring in 2022 and 2042 do not allow such a move.
The view of the house
Moody’s view is that investors did not comply with the contractual obligation at the due date.
Russia has repeatedly said it wants to pay off its debt, but says the West has prevented it from doing so by imposing deadly sanctions following a February 24 order by President Vladimir Putin for a special military operation in Ukraine.
The bankruptcy of 1998
It is worth recalling that Russia went bankrupt and devalued the ruble in 1998, when Boris Yeltsin was in the presidency.
This time, Russia has the money, but it can not pay, because the reserves – the fourth largest in the world – that Putin ordered to be created for such a crisis have been frozen by the United States, the European Union, Britain and Canada.
The era of Lenin and Stalin
It could be Russia’s first major bankruptcy in more than a century. Even when the Soviet Union collapsed, Russia owed its foreign debt.
In 1918, the Bolshevik revolutionaries under Vladimir Lenin renounced tsarist debt, shocking the world debt markets, because Russia then had one of the highest debts in the world.
The Soviet Union under Joseph Stalin ceased to provide loans to the United States and Sweden after World War II.