For the first time in just over 100 years, since 1918, Russia has defaulted by failing to pay interest on a US dollar debt.
The $100 million was due to be paid on May 27, but thanks to a grace period of about 30 days, it has now officially defaulted, defaulted. Although it happened in 1998, it was only with domestic loans.
Over the past few months, Russia has been able to meet its obligations despite the sanctions imposed, one of the most recent of which led to this default. More specifically, the US prevented any American bank or individual from receiving payments from Russia.
Russia considers this default artificial considering that Russia has the funds to repay the debt, it simply has no way to pay the US dollar investors required to pay this tranche of interest.
In terms of consequences, at least in the short term, they may be considered artificial as well, there will be little or none. The rating agencies, due to the sanctions, have suspended rating changes to Russia. Normally there would be consequences for going into default, but the sanctions currently imposed are equivalent to or worse than the consequences of a default.
In the long term, this could lead to a further reduction in economic partners. This could make it difficult for both Russia and companies to capitalize on international funds.
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