Kremlin denies Russia debt default claims: What we know so far

The Kremlin on Monday rejected claims that Russia has defaulted on its external debt for the first time in more than a century. It was reported that the grace period on two international bond payments worth $100 million lapsed on Sunday night.

In a call with reporters, Kremlin spokesperson Dmitry Peskov said Russia made bond payments due in May. But, the fact they had been blocked by Euroclear because of Western sanctions on Russia was “not our problem.”

Several reports claimed that bondholders have not received the payments as the country has struggled to keep up on $40 billion of outstanding bonds since its invasion of Ukraine on Feb. 24.

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Many sanctions have effectively cut the country off from the global financial system and rendered its assets untouchable to many investors.

“Indeed, Russia likely already defaulted on some ruble denominated instruments owed to foreigners in the weeks just after the invasion, albeit having pulled their ratings, the ratings agencies were not able to call this a default,” Timothy Ash, senior emerging market sovereign strategist at Bluebay Asset Management said in a note Monday, according to CNBC.

Around a half of Russian gold and foreign exchange reserves – some $300 billion – were earlier blocked.

“Our position is well known. Our reserves are blocked unlawfully and all attempts to use these reserves will also be unlawful and would amount to outright theft,” Peskov said.

As Russia’s offensive in Ukraine entered its fifth month, the British government said Sunday that Britain, the United States, Japan and Canada would ban new imports of Russian gold.

When asked if Russia would be able to re-direct its gold to Asia, Peskov said that the global precious metals market is “quite large.”

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“As with all other goods, of course, if one market loses its appeal, there is a redirection to where conditions are more comfortable,” Peskov added.