Russia’s national depository will replace Citi as the company that takes care of Eurobonds.
The country’s finance ministry said on Thursday that Citibank has stopped taking care of Russia’s Eurobonds, so Russia is replacing them with its own National Settlement Depository. Russia is doing this because it risks its first major external debt default in more than a century.
After Russia started what it calls a “special military operation” in Ukraine on February 24, the West and its allies put sanctions on the country. Because of these sanctions, Russia can’t really take part in the world’s financial system.
Last month, a key U.S. license that let Russia make payments ran out. This brought back the possibility of Russia not paying its debts.
But Russia says it has money and is ready to pay, and it doesn’t want to hear about defaulting. On Monday, Moscow’s Finance Minister, Anton Siluanov, said that roubles would still be used to pay off its foreign debts.
On Thursday, the finance ministry said that as of May 24, Citibank would no longer be the fiscal agent, transfer agent, paying agent, or registrar for four Eurobond issues with due dates of 2023, 2028, 2042, and 2043.
“According to the law of the Russian Federation, the functions of the paying agent and other functions for the listed bond issues were transferred to the National Settlement Depository,” the finance ministry said.
Russia is now thinking about paying its Eurobond holders by using the same system it uses to process payments for its gas in roubles. However, investors say that this won’t help Russia avoid a historic debt default.
The finance ministry also said on Thursday that payments on its Russia-2022 Eurobond, which were due on April 4, we’re late because of “illegal actions” by foreign financial intermediaries.
It said it was ready to look at all claims about its debt obligations on the Russia-2022 Eurobond and, if necessary, settle them bilaterally.
