Russian MinFin transfers 9.8 bln rubles to NSD for coupon payment on 2035 Eurobonds
MOSCOW. Sept 29 (Interfax) - Russia's Finance Ministry has transferred 9.8 billion rubles, or the equivalent of $102 million, to the National Settlement Depository (NSD) for a coupon payment on sovereign Eurobonds maturing in 2035 in line with a presidential decree issued on September 9, 2023, the ministry reported.
The NSD has received the funds, the ministry said.
The ministry has been making all payments on Russian sovereign Eurobonds in rubles since June 2022 in line with a presidential decree. At the time, the ministry divided holders of Eurobonds into three groups, depending on the infrastructure through which their ownership rights are recorded.
The first group includes investors who hold their bonds in depo accounts at the NSD or its Russian sub-depositories; payments to these bondholders are made in the usual way and no additional actions are required from them.
The second group consists of investors whose bonds are held in a Russian depository that is itself a depositor of a senior foreign depository. Payments to them are conveyed by the NSD through Russian depositories, bypassing foreign intermediaries, after the disclosure of information about the number of recorded bonds attributable to their depositors.
The third group consists of investors whose bonds are held directly in foreign depositories. Payments intended for them were transferred to a special "I" type ruble account at the NSD, where the funds were indexed according to the current market exchange rate of the currency in which the bonds were denominated until the actual payment to the bondholder. Investors in this group had to independently contact the NSD or an intermediary organization and provide documentary confirmation of their ownership rights to the Eurobonds. The NSD was authorized to compile a registry of bondholders to make payments on the Eurobonds held through foreign depositories. Foreign holders of Eurobonds were given the right to convert the ruble payments into foreign currency and transfer it out of Russia without any restrictions.
Earlier this month, not long before the redemption of sovereign 2023 Eurobonds totaling $3 billion on September 16, a new presidential decree was published that significantly changed the arrangement for making payments to bondholders whose rights are recorded by foreign depositories that had been in place for over a year.
It stipulates that funds deposited in "I" accounts before September 15, 2023, inclusive, are indexed for payments to holders of Russian Eurobonds included in the registry at the exchange rate of the domestic forex market until November 23, 2023. Funds deposited in "I" accounts starting September 16, 2023 are indexed at the rate set by the Central Bank of Russia (CBR) on the 91st day after the date of the latest payment on Russian Eurobonds.
Payments in the amount of funds deposited to "I" accounts before September 15, inclusive, are transferred by the central depository to Eurobond holders included in the registry until November 24, inclusive, in rubles. From November 25 through December 14, funds deposited in "I" accounts before September 15 are not indexed and payments from these accounts are not transferred.
Then on December 14 the obligations of the central depository to transfer payments in rubles from "I" accounts will be replaced with obligations in foreign currency based on their amount calculated according to the exchange rate of the domestic market from November 25 through December 14, 2023 and determined according to the procedure set by the Finance Ministry.
From December 15, payments to holders of Russian Eurobonds included in the registry will be transferred in foreign currency. However, forex in the accounts of Russia's central depository at foreign depositories must be used for this. Russia's central depository, the NSD has been subject to European Union blocking sanctions since June 2022.
Under the new decree, the central depository is considered to have fulfilled its obligations to transfer payments in the proper manner as soon as it conveys, "by the means available to it," instructions to the foreign depository to transfer money in foreign currency from its account to holders of Russian Eurobonds included in the registry.
The Finance Ministry and CBR have said that the procedure remains unchanged for investors whose Russian Eurobonds are held through Russian depositories. They receive payments on sovereign bonds from their depositories in the ruble equivalent at the CBR exchange rate on the date set by the issuing documents.
As for investors who hold their Eurobonds through foreign depositories, they will be able to receive payments from "I" accounts in Russian rubles for 90 days from the date of the latest Eurobond payment, the Finance Ministry said. Payments will be made at the CBR rate on the date the funds are actually paid out.
After 90 days have passed from the date of the latest payment on Eurobonds, payments from "I" accounts will be made in the foreign currency in which the obligations on the bonds are denominated.
