Russia is ready not to pay off its foreign debt in foreign currency after bondholders announced that the Kremlin had missed two payments late Sunday, according to the Wall Street Journal.
Why it matters: This is the predictable result of the sanctions imposed for the invasion of Ukraine, although Russia has successfully repulsed the inevitable for months. So far, the default has been marked by its symbolism, such as the first default on Russia’s foreign debt since 1918, reflecting the country’s international pariah status and a crumbling economy.
Our thought bubble, through Felix Salmon of Axios: Bond defaults usually happen because the issuer does not want to make the payment. In this case, Russia clearly wanted to do it; he just couldn’t.
Retrospective: Russian President Vladimir Putin signed a decree last week on a temporary measure giving the government 10 days to select banks to process payments under a new scheme, indicating that Russia will consider its debt obligations fulfilled by paying holders of bonds in rubles, reports Reuters.
What to watch: Although the deadline for Russian employees to complete a 30-day grace period for interest payments, which were originally due on May 27, has passed, it may be some time before the default is confirmed, the AP notes.
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