While the finance ministry said that it “considers it fulfilled its obligations in full,” neither of the securities involved allowed payment in rubles, according to bond documents. Both notes have a 30-day grace period, data compiled by Bloomberg show.
“The default issue is tricky,” said Abdul Kadir Hussain, head of fixed-income asset management at Dubai-based Arqaam Capital. “Russia can claim, ‘We are willing to pay, we have the money to pay, but banks are not letting us pay.’ I’m not sure how the courts would handle that.” Russia’s move to pay the debt in rubles “certainly increases the chance of a technical default,” said Gary Kirk, emerging markets portfolio manager at TwentyFour Asset Management LLP. “It is obviously a considerable issue for Russia, and some EM funds.”