Russia

The Russian government added 551.4 billion roubles ($9.5 billion) to its emergency reserve fund on Thursday as the Kremlin steps up its stimulus package in a bid to protect the economy from the impact of Western sanctions and its actions in Ukraine, Reuters reported. "The funds will be used in part to implement measures aimed at ensuring the stability of economic development in the conditions of external constraints," the government said in a statement announcing the cash injection.

The U.S. Treasury moved to block U.S. investors from making purchases of Russian debt in secondary markets, an apparent expansion from existing policy that only prohibited purchases of newly issued Russian government debt and some Russian corporate debts, WSJ Pro Bankruptcy reported. In new guidance, the Treasury Department said U.S.

Bondholders are in for a tangled mess of financial, political and legal wrangling if sanctions push Russia to a historic default, Bloomberg News reported. So far, Moscow has been able to navigate the restrictions to service its international debt, but that’s likely to change after the US closed another avenue to creditors, affecting about $100 million in payments due on May 27. The European Union has also sanctioned Russia’s central depository, which said it would suspend euro-denominated transactions.

Russia failed to meet its obligations to creditors when it didn’t make a small interest payment in April, according to an industry body overseeing the derivatives market, a ruling that triggers some $2.2 billion in credit-default swaps, WSJ Pro Bankruptcy reported. Wednesday’s decision marks the first formal recognition within financial markets of a Russian debt default after its invasion of Ukraine caused the U.S. and its allies to impose broad financial sanctions, severing Moscow’s access to foreign bank accounts and global payment systems.

Russia cut off gas supplies to more European buyers, stepping up its use of energy as a weapon and sowing further division in the continent, Bloomberg News reported. Gazprom PJSC halted pipeline shipments to the Netherlands and Denmark this week, and then surprised markets by also cutting off a small contract supplying Germany. Shell Plc and wind giant Orsted A/S refused to comply with President Vladimir Putin’s demand for payments to be made in rubles, and Gazprom responded by halting flows.

Russia's National Settlement Depository (NSD) on Friday successfully paid coupons in foreign currency on two Eurobonds, an NSD representative told Reuters, a move that could mean Russia may have again averted a default, Reuters reported. Russia is on the cusp of a unique kind of debt crisis which investors say would be a first time a major emerging market economy is pushed into a bond default by geopolitics, rather than empty coffers. The NSD said that it paid foreign currency in coupon payouts on Eurobonds maturing in 2026 and 2036, both of which were due on May 27.

Russia needs huge financial resources for its military operation in Ukraine, Finance Minister Anton Siluanov said on Friday, putting the amount of budget stimulus for the economy at 8 trillion roubles ($120 billion), Reuters reported. Russia sent tens of thousands of troops into Ukraine on Feb. 24, which prompted the West to impose sanctions against Moscow that have already fanned inflation to near 18% and pushed the country to the brink of recession. "Money, huge resources are needed for the special operation," Siluanov said in a lecture at a Moscow financial university.

Russia could already be in default on some of its foreign currency debts, according to bondholders that claim they are still owed a small interest payment that Moscow didn’t send to them earlier this spring, WSJ Pro Bankruptcy reported. A change in U.S. sanctions on Wednesday is expected to cut off Russia’s ability to stay current on its dollar-denominated sovereign debt, which it has managed to continue servicing since the invasion of Ukraine began.

Russia’s central bank delivered its third interest-rate reduction in just over a month and said borrowing costs can fall further still, halting a rally in the ruble as it unwinds the financial defenses in place since the invasion of Ukraine, Bloomberg News reported. The Bank of Russia lowered its benchmark to 11% from 14% on Thursday at an extraordinary meeting it announced only a day earlier. All 23 economists surveyed by Bloomberg predicted a reduction, with most forecasting a cut of two percentage points.

Russian bailiffs have seized more than 7.7 billion roubles ($123.2 million) from Alphabet's Google that the U.S. tech giant had been ordered to pay as part of a fine on its turnover, Interfax news agency reported on Thursday. Google's Russian subsidiary last week said it planned to file for bankruptcy after authorities seized its bank account, making it impossible to pay staff and vendors, but free services including search and YouTube will continue operating. Read more.