Russia and Russian companies are now allowed to pay foreign creditors in rubles as a tool to avoid defaults while capital controls remain in place.
The decree, signed by President Vladimir Putin on Saturday, sets out temporary regulations for sovereign and corporate debtors to provide payments to creditors from “countries that engage in hostile activities” against Russia, its companies, and citizens. The list of such nations will be released by the Russian government within two days.
The new requirement, which comes three weeks after Washington and Brussels approved sweeping measures targeting Moscow’s financial sector, applies to amounts in excess of 10 million rubles ($81,900) per month. Payments will be considered executed if they are carried out in rubles at the Central Bank of Russia’s official rate.
According to the decree, debtors can request a Russian lender to open a special “C” ruble-denominated account in the name of foreign creditors for settlement with local creditors to be paid through Russian depositories.
The financial penalties, introduced against Russia over its invasion of Ukraine, sent Russian corporate bonds denominated in foreign currencies plummeting to deeply distressed levels. Moscow retaliated by sharply reducing access to foreign currencies, aiming to restrict the ability of bondholders to receive interest and principal payments.
Earlier this week, International Central Securities Depositories (ICSD) Euroclear and Clearstream stopped settling rouble-denominated transactions. The depository excluded all securities issued by Russian entities from all Triparty transactions, restricting access to the tool traditionally used to make payments to bondholders.
Creditors from Russia and the states that have not joined the sanctions will be able to receive debt payments in rubles or in foreign currency after getting a special permit by the Central Bank, the regulator said in a statement.
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