ISTANBUL

Global rating agency Moody's announced that Russia has defaulted on to foreign debts worth $100 million.

According to a Moody's statement on late Monday, holders of Russia's sovereign debt had not received payments by the time.

"The failure of these payments to reach bondholders follows the expiry of the general license of the United States' Office of Foreign Assets Control on 25 May, which, until then, had allowed US financial institutions involved in the payments to continue to process them," the agency said.

Russia has announced that it will pay foreign debts in rubles.

Moody's said: "We have held the view that we would likely treat payments in rubles as a default for bonds that do not allow for such redenomination in the contractual terms.

"Eurobonds issued by Russia after 2018 allow under certain conditions for repayments to be made in rubles. However, eurobonds issued before 2018 either do not contain this alternative currency clause or allow for repayments to be made only in other hard currencies."

It stressed that there were already two defaults on unrated debts issued by Russia since the beginning of its war on Ukraine.

Moody's added that Russia did not pay nonresident's government bonds, due on March 2, because of its central bank's prohibitions payments for nonresidents. "Such an event constitutes a default on the unrated debt under our definition."

"The Ministry of Finance of the Russian Federation announced on 31 March that it had redeemed $1.448 billion of its eurobonds due on 4 April with rubles rather than US dollars," the rating agency said.

"We consider this a follow-on default in the form of a distressed exchange, another type of default under our definition, because holders did not receive the original legal promise," it added.

In May, Russian Finance Minister Anton Siluanov had said that his country will not default on foreign debts, adding that the country has enough money to finance its debts.

"With a reasonable budget and fiscal policy, we will resist additional sanctions and maintain our financial independence," he added.

Russia is grappling with punitive economic sanctions imposed by international powers in the wake of its war on Ukraine.