Russian Finance Minister Antonov Siluanov stated on Friday, May 27: “Current statements about the default [on Russian foreign bonds] are out of touch [with the reality] at all. This is the default of Western countries before themselves. We have money. I reiterate we will make payments.” Siluanov was referring to the May 25 announcement by the U.S. Treasury that it would no longer permit Russia to make any foreign debt payments, since these would be in violation of American sanctions.
Siluanov went on to denounce the dollar, euro and other currencies as “toxic.” Speaking to students at a Moscow university, he said: “The American and European currencies are toxic for us. What should we do with them? What do we need them for? That is, we are selling our own wealth—gas, while getting candy wrappers, toxic candy wrappers. Who needs them?”
Russia has offered to pay its creditors in rubles if the U.S. prohibits payments in dollars, and the Bank of Russia central bank is arguing that there are “Currency Indemnity” clauses in some of its foreign bond agreements which permit payment in rubles, and their subsequent conversion into foreign currencies. But don’t hold your breath for these technicalities. According to RT, “Maximilian Hess, head of political risk and Russia specialist at Hawthorn Advisors, a London-based consultancy, said the International Swaps and Derivatives Association or international credit rating agencies could still declare Russia to have defaulted on its debts if ruble payments are made to non-residents, citing `problems with the convertibility’ of the Russian currency.”
The next bond due dates are June 23 and June 24.
