Russia does not abandon its obligations to all investors - Finance Ministry

Russia does not refuse fulfilling its debt obligations to all categories of investors, the Ministry of Finance said in a statement.

"The Russian Federation does not refuse to fulfill its debt obligations to all categories of investors. To this end, in the absence of the technical possibility of making payments in foreign currencies, the Russian Federation has offered investors a new settlement mechanism in accordance with Decree of the President of the Russian Federation No. 394 from June 22, 2022," the ministry said.

Russia directed funds to make the Eurobond payment in advance but beneficiaries have not received money due to actions of foreign financial intermediaries and this event cannot be treated as the default, the statement noted.

"In accordance with issuing documentation for mentioned issues, the event of default is the failure to pay on the debtor’s side but the payment was made in advance - on May 20, 2022. In this case, failure of investors to receive funds occurred through third party action and not as a result of the failure to pay, which is not expressly provided in issuing documentation and should be considered within the framework of general norms of law governing conditions of the issue, with consideration of all circumstances and good faith in actions of the parties," the Ministry said.

International payment and clearing systems failed to deliver funds sent by Russia to beneficiaries, although they had received them in advance and had the legal and financial possibility to make required transfers, the Ministry noted. "Considering that actions of foreign financial intermediaries are beyond the control of the Russian Finance Ministry, it appears reasonable for investors to approach relevant financial institutions directly in case of failure to receive Russian Federation Eurobond payments from them," the statement said.

Bloomberg reported earlier that Russia had defaulted on sovereign debt. The article noted that the deadline for paying $100 mln on coupon expired on the night of June 27.