Russia Says Debt Payments Abroad Hinge on Unfreezing of Reserves

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Russia is prepared to pay its foreign creditors on condition that a freeze on much of its $643 billion cash pile is lifted, according to Finance Minister Anton Siluanov.

Speaking at a government meeting attended by President Vladimir Putin, Siluanov reiterated Russia’s decision to service its dollar and euro-denominated bonds in rubles. Bondholders would be able to get their payments in hard currency only if a block on the central bank’s reserves held overseas is removed, he said.

“We will repay our external obligations in rubles, but we will carry out the conversion as our gold and foreign exchange reserves are unfrozen,” Siluanov said Thursday.

With a March 16 coupon payment looming, investors are frantic for signs Russia intends to pay and avert a default on sovereign foreign debt. The coupon payments have a grace period of 30 days.

The asset freeze on the central bank was imposed as part of a raft of economic penalties to punish Russia for its Feb. 24 invasion of Ukraine.

“In the past two weeks, western nations have effectively launched a financial and economic war against Russia,” Siluanov said. “The West has defaulted on its financial obligations to Russia, frozen our gold and currency reserves, sought to halt our foreign trade, our exports, by all means possible, harming global trade in the process.”

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