Pitch: "Russia Defaults if Dollar Treasury Interest Paid in Rubles"... Turning Point on the 16th

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Fitch, one of the world's top three credit rating agencies, warned on the 16th (local time) that if Russia pays interest on its foreign currency sovereign bonds in rubles instead of the contract currency, the dollar, one day before the payment date, it will enter a state of default.

According to Bloomberg on the 15th, Russia must pay $117 million in interest on its sovereign bonds on the 16th. This interest payment is Russia's first foreign currency repayment following Western sanctions imposed after Russia's airstrikes on Ukraine. Fitch stated, "If Russia repays the dollar-denominated bond interest in rubles on the 16th, it will be considered a sovereign default after a 30-day grace period."

Although there is a 30-day grace period for this interest payment, so an immediate default declaration is not expected, it is likely to serve as a gauge for whether Russia will make the repayment. If Russia defaults as a result, it will be the first foreign currency default since the Bolshevik Revolution in 1917.

This warning came because the Russian government announced that half of its payment reserves are frozen due to Western sanctions and that it intends to pay and repay sovereign bond interest in rubles. The market believes Russia has sufficient foreign currency holdings to make the interest payments and repayments, but the likelihood of the Russian government reversing its stance is low.

International credit rating agencies including Fitch, Moody's, and S&P have downgraded Russia's credit rating to just before default and are closely monitoring the situation.

This content was produced with the assistance of AI translation services.