WSJ: Russia’s sovereign default has become more likely

Russia’s sovereign default became more likely after U.S. bond market regulators announced that the Kremlin defaulted on its obligations to service Russia’s sovereign debt by offering interest payments to creditors on dollar-denominated bonds in rubles. This was reported by The Wall Street Journal.

The payments in rubles were made on April 6 after U.S. bank JPMorgan refused to transfer $649 million in sanctions-frozen accounts of the Russian Central Bank to holders of Russian bonds.

If Russia does not pay this amount by May 4, when the so-called grace period expires, it will formally be in default or, as Moody’s rating agency analysts wrote, such a situation “could be considered a default.

The Wall Street Journal estimates that the debts Moscow refuses to service amount to $6 billion. Russia’s Finance Ministry says it has met its obligations by trying to pay interest on the debts in rubles.

Investors buying insurance instruments to protect holders of Russian government bonds in the event of a default estimate its probability at 93 percent.