Russia to prepare mechanism for paying investors without OFAC license in time for June payments on dollar Eurobonds - Siluanov
MOSCOW. May 30 (Interfax) - Russia will prepare a mechanism that will enable it to conduct settlements with investors without a license from the U.S. authorities by June 23-24, when it is due to transfer the next coupon payments on dollar-denominated Eurobonds, Finance Minister Anton Siluanov said.
The license for such payments expired on May 25, and the U.S. Office of Foreign Assets Control (OFAC) did not renew it. Until now, Russia's Finance Ministry has managed to carry out all payments on foreign debt in the currencies of the bond issues, dollars and euros. But after the expiration of the OFAC license Russia will technically not be able to make payments in dollars.
Payments on foreign currency sovereign Eurobonds due on May 27 - coupon payments on Russia-2026 and Russia-2036 Eurobonds in dollars and euros - were made by the Finance Ministry to the National Settlement Depository (NSD), the payment agent for these issues, before the OFAC license expired.
Russia is due to make payments on two dollar bond issues, Russia-2027 and Russia-2047, on June 23, and on another dollar issue, Russia-2028, on June 24.
Siluanov recalled that in recent years the Finance Ministry has stipulated in the conditions of sovereign Eurobond issues that it has the option to pay in rubles.
"But borrowing done in previous years did not have such a provision. Therefore, we will essentially supplement these conditions with the possibility of payment in rubles with subsequent conversion into foreign currency. We are now preparing such proposals in the government, and I think that by the next payment, which will take place at the end of June this year, such a mechanism will be prepared," Siluanov said in an interview with Nailya Asker-Zade on TV channel Rossiya 24.
"In this case we will work not with the leadership of western countries, but with investors. For us this cooperation is the most important," Siluanov said.
There are no technical obstacles to servicing debt in euros, he said. "The Europeans did not make such exotic decisions [as the U.S. Treasury Department]. Therefore, if we borrowed in euro Eurobonds, we will also in good faith fulfill obligations to all holders of our debt, whether it be Russian or foreign investors. For us there is no difference in this case, since investors lent to us," Siluanov said.
Russian holders of sovereign Eurobond who get payments on them in rubles will, like foreign investors, "be able to, naturally, convert into any foreign currency," he added.
Asked whether the Finance Ministry has thought about suspending servicing of the foreign debt amid sanctions, Siluanov again said that Russia "is maintaining the status of a reliable borrower" and will do everything in its power to meet its obligations.