Moody's says Russia defaulted on debt

Moody's said Russia will likely default on more foreign debt

Moody's said Russia will likely default on more foreign debt

Moody's ratings agency has confirmed that Russia defaulted on its foreign debt for the first time in a century, after bond holders did not receive $100 million in interest payments.

The historic default follows a series of unprecedented Western sanctions that have increasingly isolated Russia from the global financial system following its invasion of Ukraine.

"On 27 June, holders of Russia's sovereign debt had not received coupon payments on two eurobonds worth $100 million by the time the 30-calendar-day grace period expired, which we consider an event of default under our definition," Moody's said.

The Russian authorities insist they have the funds to honour the country's debt, calling the predicament a "farce" and accusing the West of pushing an "artificial" default.

Moody's released an "issuer comment" instead of a formal default declaration, as sanctions bar credit ratings agencies from covering Russia's sovereign debt.

The sanctions have included freezing the Russian government's stockpile of $300 billion in foreign currency reserves held abroad, making it more complicated for Moscow to settle its foreign debts.

But Moody's said it "would likely treat payments in rubles as a default for bonds that do not allow for such redenomination in the contractual terms".

The country last defaulted on its foreign debt in 1918, when Bolshevik revolution leader Vladimir Ilich Lenin refused to recognise the massive debts of the deposed tsar's regime.

The International Monetary Fund's number two official, Gita Gopinath, said in March that a Russian default would have "limited" impact on the global financial system.

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