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Russia paid off a portion of its debt in rubles

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The Russian Ministry of Finance announced on Wednesday Paid in rubles Part of its debt, about $ 650 million. Interest and other maturities fixed in dollars are negotiated, so the contracts had to be repaid in dollars. However, Russia could not pay in dollars as the US government blocked it with a decision on Monday.

On Monday, the U.S. Treasury Department blocked Russia’s ability to access dollar reserves held by US banks, including repaying Russia’s debt. At the beginning of the occupation of Ukraine the reserves were frozen, but an exception was made to repay the debt. This exception was removed earlier this week.

So, on Wednesday, the Russian government asked JPMorgan Chase, one of the US banks holding dollar reserves, to repay a $ 650 million debt. But JPMorgan refused to make the deal after consulting with the US government. At that time, Russia was forced to use a local bank (rubles) for payments.

Russia has a 30-day “grace period” to settle matters, and find the dollar to pay off its debt in the right currency: Otherwise, depending on the various rating agencies, pay off your debt in a different currency than expected from contracts, and it will become the default. , I.e., can be compared to non-payment. Someone will talk about the “technical default” because Russia has the money to pay, but it was blocked because of sanctions.

However, the Russian Treasury said it considered the payment “in full”, although the payment was made in another currency. It is unknown at this time what he will do after leaving the post.

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– Also read: Russia is at risk of default

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