For the first time in more than a hundred years, Russia is defaulting on its international debt: Seven Taiwanese insurers are waiting in vain for around $100,000 million in interest on bonds. The Kremlin denies responsibility, but there could still be consequences after the end of the war.
Seven Taiwanese insurers have not received the interest payments due on Russian government bonds even after a grace period has expired. This was announced by the local financial supervisory authority in Taipei on Tuesday. The payments were actually due on May 27th. A 30-day additional payment period ended on Sunday or Monday - depending on the legal interpretation.
Because of the non-payments, both the US government and the rating agency Moody's said that Russia has defaulted on its international bonds for the first time in more than a century. The reason for this is the Western sanctions imposed on the invasion of Ukraine, which have largely cut the country off from the global financial system. Russia's last state bankruptcy was in 1998 due to money shortages in the wake of falling oil prices and the Asian crisis, but at the time it only affected internal debt in rubles.
The payments in question are a total of $100 million in interest on two bonds: one in US dollars and one in euros. However, Russia is not threatened with bankruptcy, as the country has built up a thick financial cushion thanks to the income from oil and gas exports. In addition, national debt, at 20 percent of gross domestic product, is very low compared to western industrialized countries.
The default is likely to cut the country off from the global financial market even after the war is over and the sanctions are lifted - namely until creditors are fully satisfied and all legal disputes resulting from the default are settled. The government in Moscow denies that it has defaulted on paying its foreign debt. In a phone call with reporters on Monday, Kremlin spokesman Dmitry Peskov said Russia had made bond payments due in May. The fact that they were blocked by the clearing house Euroclear because of Western sanctions against Russia is "not our problem".
