June 27, 2022
Russia defaulted on its foreign debt obligations for the first time since 1918 on Monday following months of speculation that crippling Western sanctions in response to the Ukraine war would force the Kremlin into nonpayment.
The historic default occurred after Russia failed to make approximately $100 million in interest payments on two dollar- and euro-denominated international bonds within a 30-day grace period. The payments were originally due May 27.
The White House and other Western officials have anticipated a Russian default for months after sanctions effectively severed the Kremlin’s access to the global economy.
The US and other nations imposed sweeping penalties in response to the brutal invasion of Ukraine.
This morning’s news around the finding of Russia’s default, for the first time in more than a century.
Situates just how strong the actions are that the US, along with allies and partners have taken, as well as how dramatic the impact has been on Russia’s economy,” a US official told Reuters at the G7 summit.
White House Press Secretary Karine Jean-Pierre said at the time that a default was imminent and that nonpayment would mark “an enduring sign of their status as a pariah in the global financial system.”
The Kremlin, which has continued to rake in huge profits from its oil and gas shipments during the Ukraine war, has decried the default as “artificial situation” – asserting that it has the money to cover its debts and Western officials blocked payments from reaching bondholders.
“Statements of a default are absolutely unjustified,” Kremlin spokesperson Dmitry Peskov said Monday.
“The fact that Euroclear withheld this money and did not bring it to the recipients is not our problem,” Peskov said, according to Reuters.
“There are absolutely no grounds to call such situation a default.”
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