March 16, 2022
Japan Bank for International Cooperation (JBIC) offers guarantees for approximately 65 billion yen ($550 million) of yen-denominated samurai bonds
Russia’s Gazprom will likely be considered default on its debt if it redeems yen-denominated samurai bonds in rubles, Tadashi Maeda, governor of the state-affiliated Japan Bank for International Cooperation (JBIC), said on Wednesday. .
In March 2021, JBIC is offering guarantees for about 65 billion yen ($550 million) of yen-denominated samurai bonds issued by Gazprom, Maeda told parliament.
The economic cost of Russia’s assault on Ukraine was on full display as Vladimir Putin’s sanctions-ravaged government was on the brink of its first international default since the Bolshevik Revolution.
Moscow had to pay $117 million in interest on two dollar-denominated sovereign bonds it sold in 2013 meant even seasoned investors had to guess what might happen.
One described it as the most closely watched government debt payment since Greece defaulted at the height of the eurozone crisis. Others said an emergency “grace period” that gives Russia an extra 30 days to make the payment could drag the saga out.
“The problem with defaults is that they are never clear and this is no exception,” said Guido Chamorro, emerging markets portfolio manager at Pictet.
“There’s a grace period, so we won’t really know if it’s a default or not until April 15,” he said, referring to the situation if no coupon payments is not performed. “Anything can happen during the grace period.”
A default on Russian public debt was unthinkable until what Putin called a “special military operation” in Ukraine began in late February.
It had nearly $650 billion in foreign exchange reserves, coveted investment-grade credit ratings from S&P Global, Moody’s and Fitch, and made hundreds of millions of dollars a day selling its oil and gas to skyrocketing prices.
- Reuters, with additional editing by George Russell