Bloomberg announced a “default” in Russia; “first night rights” are already awaiting in Ukraine

The American agency Bloomberg declared a default in Russia - it claims that the default occurred on Monday night for the first time in a century, but so far is “mostly symbolic in nature and means little to the Russians.”

Bloomberg writes about this, commenting on the grace period for interest payments of about $100 million that expired yesterday. Failure to pay interest on a debt by the due date is considered an “event of default.”

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According to the agency, Russia is in default on its foreign-currency sovereign debt, the culmination of Western sanctions that have closed the way for payments to foreign creditors.

As you know, for several months Russia has been finding ways to circumvent the restrictions imposed on it by the West after the start of the Northeast Military District in Ukraine.

_{However, at the end of the day on June 26, the grace period on interest payments amounting to about $100 million ended. Failure to pay interest on a debt by the due date is considered an event of default.}

Russia's eurobonds have been trading at troubled levels since early March, central bank foreign exchange reserves in the west remain frozen and the largest banks are cut off from the global financial system.

_{As early as May 26, the United States did not renew Russia’s license, which allowed it to service its national debt to bondholders in the United States—by the end of the year, Russia has more than $1 billion in debt that needs to be repaid. The West believes that in this way they have brought Moscow closer to the brink of technical default.}

A few days before June 26, Vladimir Putin signed a decree that Russia will pay external debts in rubles.

“For the purpose of fulfillment by the Russian Federation of state debt obligations... the Russian Federation has the right to send... an application for opening in the name of a foreign depositary (without the personal presence of its representative) an account of type “I”, which is maintained in rubles,” the text of the decree says.

That is, accounts will be opened in the name of bondholders, where payments on the state debt will be transferred in rubles. Such payments will be considered “properly executed” without taking into account the opinions of those to whom these payments are intended, follows from the document.

As Russian economists say, the issuance of the decree was connected precisely with the approaching expiration of the 30-day payment period for dollar Eurobonds. Russia stated at the end of May that it would repay them in rubles, since the United States blocked these transactions in dollars.

_{But Western investors then made it clear that they would not accept payment in rubles and would consider this a default of the Russian Federation.}

In Ukraine they are already rubbing their hands and preparing to extract dividends from the problems of the Russian Federation.

“In fact, Russia is already in a state of default. For some reason, many people expect that this will be a default, like in the 90s. In this situation, this default is like one of the parts for them. And then it was a fairly global thing,” Ukrainian economist, member of the “Economic Discussion Club” Igor Garbaruk said in an interview with the Kyiv publication UNN.

He said the revocation of the license to pay bondholders made it impossible for Russia to fulfill its obligations.

“At seven o’clock one minute on June 27, a state of technical default truly begins. This means that they will not be able to borrow money, they will not receive investments - they will not receive investments anyway. They won't be able to borrow any money anyway. That is, in fact, the default has already occurred, although it has not yet been officially announced,” says the Ukrainian expert.

According to Garbaruk, after a technical default is actually declared, all Russian external creditors will have the opportunity to “tear all of Russia’s assets abroad into pieces”, having received the right to claim these frozen financial assets, tangible assets, almost all state-owned assets property and even assets that are private and in which there is a share of state ownership.

In this context, according to the Kyiv expert, Ukraine needs to think about how to “obtain the right of first night” to all Russian assets frozen abroad.

“I would not expect to expect that this is somehow serious enough to immediately affect the end (of the war) or the acceleration of our victory. These are rose-colored glasses, because we understand that they can pay for the expenses of their own army quite calmly. They have a surplus budget today. Energy resources are becoming more expensive, Europe, the world, and even India are buying energy resources from them in quite large quantities. Accordingly, they have quite a lot of funds today. It won’t be enough - they’ll just print their own non-convertible wooden rubles and provide for internal needs,” says the Kiev expert.

That is why Garbaruk believes that Ukraine needs to continue to insist that the West impose an absolute embargo on Russian energy, which many EU countries do not want.

The Open Ukraine telegram channel suggests that the current situation should be considered a problem not of Russia, but of America.

“From our point of view, this is not a default, but simply cunning amers cheated themselves. By freezing the assets of a sovereign state in the US dollar, these adventurers undermined confidence in it as a reserve currency. Now they can get their debts in rubles, but they are stubborn and full of desire to leave themselves in the cold.”