Sanctions delay payments to Russian corporate Eurobond holders
Thursday, 24 March 2022
Russian holders of domestic corporate Eurobonds face delays in receiving payments settled through international agents, as transactions get snarled up by sanctions, Russia's National Settlement Depository (NSD), companies and analysts said.
Western sanctions and countersanctions by Moscow mean that the payment process on hard currency bonds issued by Russia or Russian companies has become much more complicated, with some payments delayed or getting stuck in transit, according to Reuters.
Russian sovereign and corporate Eurobond payments were previously processed by international clearing and settlement firms such as Clearstream and Euroclear, which process payments and confirm ownership of assets before sending cash to Western bondholders and then to NSD for domestic holders.
Euroclear, owned by exchanges and banks, and Clearstream, part of Deutsche Boerse, said they would stop settling trades in Russian securities in response to European Union sanctions after last month's Russian invasion of Ukraine, which Moscow describes as a "strategic military operation".
"Delays are possible for payments cleared via international depositories," NSD said in a statement to Reuters.
"This could be linked to 'manual' processing of the orders linked to Russian companies as well as with a need to get clarifications from European regulators," NSD added.
Clearstream and Euroclear did not respond to requests for comment.
Russian companies are due to pay $18.5 billion in external debt, including interest payments known as coupons, by year-end, ITI Capital analysts estimate, and the Russian finance ministry is due to pay another $3.4 billion in sovereign Eurobonds.
Russian holders of at least four corporate Eurobonds are struggling to get payments, the firms themselves and ITI Capital say, namely steelmakers NLMK and Severstal, state-owned Russian Railways and fertilizer producer Eurochem.
NLMK, Russia's top steelmaker, said in a statement on Tuesday that had it paid a coupon on its Eurobond due in 2024 and foreign noteholders started to receive their coupon payments, while Russian holders did not.