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Russia defaults on sovereign debt for first time in century, Bloomberg reports

In a culmination of the tough Western sanctions that cut off payment routes to foreign creditors Russia has defaulted on its foreign-currency sovereign debt for the first time in a century, Bloomberg reports.

For months, the country had been finding ways around the sanctions imposed after the Kremlin's invasion of Ukraine. But at the end of Sunday, the grace period for paying $100 million expired.

Thus, the country has defaulted on its foreign currency obligations for the first time since 1918, Bloomberg says.

Back in March, economist Sergei Guriev told The Insider that a default was imminent, but people would not be affected because what was usually associated with the 1998 default, i.e. a huge devaluation, a spike in inflation, the freezing of deposits, and the closure of stock markets - had already happened since the war with Ukraine began.

After imposing sanctions against Russia and banning the use of foreign currencies, the Ministry of Finance had problems redeeming government bonds denominated in foreign currencies. For a while, the U.S. Treasury Department allowed Russia to service its foreign debts from reserves, but later banned that payment channel as well. The Russian side announced that in fact the United States was pushing Russia into a technical default, despite the fact that Russia has the means to repay its obligations. As a result, the Russian authorities decided to convert the obligations into rubles.

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