JSC Russian Railways (RZD) defaulted on Eurobonds after failing to pay interest on them last month.

Russian Railways

This is evidenced by the data of the Committee on Credit Derivatives (Credit Derivatives Determinations Committees). According to Bloomberg, Russian Railways became the first Russian company with such a status.

The Committee noted that the default status of Russian Railways was assigned after the coupon paid on March 14 did not reach investors before the end of the 10-day grace period, informs Railway Supply magazine.

Now contracts will be activated that insure the company’s debt against default, and Eurobond holders will be able to receive part of the funds through insurance.

RZD itself said it tried to pay a coupon on the bonds, but was unable to transfer the funds to their owners, taking into account “obligations to comply with legislative and regulatory requirements in the correspondent banking network.”

The agency notes that RZhD’s default is officially fixed when investors expect Russia’s default on sovereign bonds after coupon payments on two issues last week were made in rubles.

Both issues of Eurobonds have a 30-day grace period for paying interest, so they have not officially defaulted yet. If this happens, it will be Russia’s first default on its foreign debt in more than a century.

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