As noted Ministry of Finance, funds for paying coupon income on bonds of external bond loans of the Russian Federation with a maturity date of 2027 (ISIN: RU000A102CK5) and 2032 (ISIN: RU000A102CL3) in a total amount of 3.6 billion rubles. (equivalent to 37.2 million euros) were received by the paying agent for Eurobonds – the National Settlement Depository (NSD).
On September 9, 2023, Russian President Vladimir Putin signed a decree on a modified procedure for the execution of government debt obligations of the Russian Federation to residents and foreign creditors. According to the innovation, the remaining part of the funds after transfers in favor of the owners of Eurobonds of the 1st and 2nd groups is credited by NSD to a special account of type “I”. Payments will be made from it to owners of the 3rd group, to whom it is not possible to transfer funds within the framework of standard procedures due to the failure of foreign settlement and clearing organizations to fulfill their obligations.
Owners of Group 3 Eurobonds will be able to receive their payments within 90 days in Russian rubles at the Central Bank exchange rate at the time of actual payment of funds. After this period, starting from the date of the next payment on Eurobonds, payments from the “I” account will be made in the corresponding foreign currency in which the obligations on the Eurobonds are expressed.
On May 22, 2023, Putin signed a decree requiring Russian Eurobond issuers to issue replacement bonds by January 1, 2024. Additionally, securities can be issued an unlimited number of times, and the parameters of the new securities must be similar to Eurobonds in terms of maturity, income, coupon payment schedule and par value. If holders of Eurobonds did not purchase securities during the placement period, then the fulfillment of obligations is carried out by Russian legal entities by transferring funds in the manner determined by the board of directors of the Bank of Russia.
Prior to this, in May 2022, the US Treasury decided not to renew the license, which allowed the Russian Ministry of Finance to service part of the country’s sovereign debt in dollars. “The US Treasury Office of Foreign Assets Control will not renew the provisions of the 9C general license, which expires on May 25,” the US Treasury said in a statement. In response, the Russian Ministry of Finance stated that it would service the government debt in rubles through the NSD.
Before the adoption of Presidential Decree No. 665 of September 9, 2023, another Putin decree was in force from
Then, after the first payment of obligations under Eurobonds, Finance Minister Anton Siluanov told Vedomosti that settlements with holders of Russian Eurobonds will be made according to a scheme similar to payment for Russian gas supplies, only in reverse order. To receive payment on the government debt in its original currency, the investor will have to open foreign currency and ruble accounts in a Russian bank and issue instructions to sell the currency.
As Vedomosti previously wrote, since the beginning of 2023, according to the Moscow Exchange, replacement bonds account for a third of corporate bonds in the glass, while the main source of liquidity in the debt market has become individuals, said the director of the department for work with issuers Moscow Exchange Natalya Loginova at the RBC forum. The share of individuals in the debt market is now 66%, she added.
As of August 1, the volume of Russia’s external public debt in foreign currency amounted to 56.2 trillion rubles, of which government guarantees accounted for 18.4 trillion rubles.
