Russia declares external debt default

As S&P Global Ratings reported, Russia has defaulted on its foreign debt as the county tried to pay for its debt with rubles, not dollars, according to CNN.

Russia attempted to pay in rubles for two dollar-denominated bonds that matured on April 4, S&P said in a note on Friday.

The agency said this amounted to a “selective default” because investors are unlikely to be able to convert the rubles into “dollars equivalent to the originally due amounts.”

According to S&P, a selective default is declared when an entity has defaulted on a specific obligation but not its entire debt.

Moscow has a grace period of 30 days from April 4 to make the payments of capital and interest, but S&P said it does not expect it will convert them into dollars given Western sanctions that undermine its “willingness and technical abilities to honor the terms and conditions” of its obligations.

Also, Bloomberg reported that Russian railways has defaulted on its external bonds. The company tried to make a payment but failed to do so because of sanctions.