Russia sets rules for foreign debt payments

Russian President Vladimir Putin signed a decree establishing a temporary procedure for payments of external foreign currency public debt on Wednesday.

The bond-payment procedure mirrors the mechanism Moscow uses to process payments for its gas, in rubles.

The decree, in particular, establishes the specifics of working with foreign depositories, maintaining special accounts, indexing funds credited to them, and paying coupons on bonds.

Putin also instructed the Cabinet of Ministers and Ministry of Finance to identify banks for payments on Eurobonds under the new scheme within 10 days and make the necessary technical arrangements.

According to the document, which was published on the Kremlin website, Russia’s Eurobonds obligations will be recognized as fulfilled upon payment in rubles in an amount equivalent to the foreign currency value, and will be calculated at the current foreign exchange rate.

The US has prevented Russia from making debt payments in foreign currency. Last month, Washington ended a bond payments waiver, intending to stop Russia from serving its sovereign debt so it would default. Moscow has accused Washington of trying to engineer an artificial default, since the country has the funds to pay its debts.