Russia defaults on Foreign Debt for a first time in a century

Russia has defaulted on foreign-currency sovereign debt for a first time since 1918 as a result of the stringent financial sanctions, Bloomberg reported on Monday.

On Sunday, the country missed the deadline for snared interest payments due May 27, which is considered an event of default if missed.

As a result of the Russia’s invasion of Ukraine, the country was turned into a financial and political outcast. The central bank’s foreign reserves remain frozen and the banks in the country are severed from the global financial system.

Usually, a formal declaration would come from the ratings firms but the sanctions on Russia from European countries have forced them to withdraw ratings on any entities in the country.

The Kremlin has repeatedly pushed back against the default saying there is no grounds for it. However, the country is unable to send money to bondholders because of the western sanctions.

Meanwhile, Reuters reported that some Taiwanese holders of Russian bonds denominated in euros had not received interest payments.

Euroclear has not confirmed if the payments were blocked but it stated that it adhered to the sanctions.

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