Credit committee to meet on Friday to discuss potential ‘credit event’ in Russia

A Russian one ruble coin is seen in this illustration taken April 5, 2022. REUTERS/Maxim Shemetov/Illustration

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LONDON, May 26 (Reuters) – A credit derivatives committee will meet on Friday to determine whether a “credit event” occurred after Russia made payments on its sovereign debt but failed to add interest accrued during the payment grace period.

Foreign holders of a Russian sovereign bond that matured last month are seeking a ruling on whether $1.9m in arrears was a ‘credit event’ that could allow them to eventually collect a payment on default insurance.

The EMEA’s Credit Derivatives Determinations Committee (CDDC) said on its website on Thursday that holders of the 2022 bond had sent notice via Euroclear, one of the world’s largest settlement systems for stock and bond transactions, “requiring the payment of approximately $1.9 million”. .

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They had asked if a “payment credit event” had occurred on the unpaid accrued interest and the committee later said it had granted the request.

The committee will meet at 11:00 UTC on Friday to discuss the matter, it said on its website.

“The bonds matured on April 4, 2022 but payment of principal and interest due at maturity was not made until May 2,” the holder’s query added.

The notice via Euroclear was sent in mid-May.

Russia had paid nearly $650 million, including the maturing bond, during a grace period, justifying possible interest arrears. Read more

But default on other debt now looks inevitable according to some investors, after the US Treasury this week opted not to extend a license that had allowed creditors to receive payments from Russia despite financial sanctions.

According to JPMorgan’s calculations, there is currently $2.54 billion in net notional credit default swaps (CDS) outstanding against Russia, including $1.68 billion on the country itself and the rest on the CDX.EM index.

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Reporting by Jorgelina do Rosario and Karin Strohecker in London and Rodrigo Campos in New York; edited by Dhara Ranasinghe

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Joseph K. Bennett