Sanctioned Russian bank VTB pays FX bond coupons in roubles
2022.04.05 13:31
Plastic letters arranged to read “Sanctions” are placed in front of VTB bank logo in this illustration taken, Bosnia and Herzegovina, February 25, 2022. REUTERS/Dado Ruvic/Illustration
(Reuters) – Sanctioned Russian lender VTB made coupon payouts in roubles to holders of its subordinated bonds denominated in U.S. dollars and euros, the National Settlement Depository said on Tuesday.
Russia’s ability to continue servicing debt in foreign currencies is in focus as the government, which has so far averted a default, now faces issues paying holders of its sovereign debt.
State-owned VTB, Russia’s second-largest bank, carried out coupon payments on its two bonds denominated in foreign currencies in Russian roubles, according to regulatory fillings disclosed by the bank.
On Monday VTB paid a total 255.7 million roubles ($3.10 million) in coupon payouts on its two euro-denominated bonds and 312.3 million roubles on the dollar-denominated bond issued last year, the documents showed.
Russian companies in other sectors have also encountered difficulties.
Earlier on Tuesday Russian diamond producer Alrosa said it had asked its trustee to apply to the UK’s sanctions regulator for a special licence to allow the company to make coupon payments on its $500 million Eurobond.
State-owned Russian Railways has said it attempted to make interest payments on bonds denominated in Swiss francs but was unable to do so.
The default risk carries possible lasting consequences for Russia, which now has limited access to its gold and foreign exchange reserves because about $300 billion of state assets have been frozen by Western sanctions in response to what Moscow calls its “special military operation” in Ukraine.
If Russia fails to make any of its looming bond payments within their pre-defined timeframes, or pays in roubles where dollars, euros or another currency is specified, it will constitute a default.
While Russia is unable to access international borrowing markets because of sanctions, a default would prohibit it from accessing those markets until creditors are fully repaid and any default-related legal cases are settled.
($1 = 82.4540 roubles)
