Fitch equates paying interest in rubles to a Russian suspension of payments

Madrid, March 16 (.).- The rating agency Fitch will consider equivalent to a suspension of payments that Russia pays in rubles the coupon of a debt issue issued in dollars that matures this Wednesday, although Moscow still has a grace period 30 days to fulfill its obligations.

Fitch argues that this decision is consistent with the reduction of Russia’s long-term debt that it decided on March 8, when it gave the country’s debt a note that indicates the beginning of a default process (C).

According to a statement released by the agency on Tuesday afternoon, if Russia does not pay the coupons due today in dollars, it will imply a downgrading of these issues to restricted payment suspension (D), a rating that will also be given to long-term debt at end of the grace period, one step below the one granted on March 8.

This Wednesday Russia has to pay about 117 million dollars in interest. These are the first coupons in foreign currency that expire after the change in regulations made by Putin on March 5.

This regulation gives a differentiated treatment to foreign debt payments to the creditors of the countries that have joined the sanctions against Moscow after the invasion of Ukraine.

The agency also justifies the downgrade of Russia’s long-term debt rating in rubles (OFZ) to C (beginning of a default process) in the fact that on March 2 foreign investors were not paid the payments in local currency that corresponded to them.

In his opinion, the Russian Ministry of Finance transferred funds to the entity in charge of the liquidation but they did not reach non-resident investors due to the restrictions on the Central Bank of Russia.

Although the documentation for this latest issue (OFZ) does not provide for any type of grace period, Fitch indicates that it will not consider it a default until 30 days of grace have elapsed from maturity.