Russia

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.

World Bank President David Malpass on Wednesday suggested that Russia's war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession, Reuters reported. Malpass told an event hosted by the U.S. Chamber of Commerce that Germany's economy, the world's fourth largest, has already slowed substantially due to higher energy prices, and said reduced production of fertilizer could worsen conditions elsewhere. "As we look at the global GDP ... it's hard right now to see how we avoid a recession," Malpass said.

Russia will service its dollar debt in rubles after the expiry of a sanctions loophole closed the option of payments in the US currency, potentially putting Moscow on track to default, Bloomberg News reported. The announcement came a day after the US confirmed the end of the waiver, creating another headache for Russia as it tries to get funds to investors. A payment in rubles would breach the terms on a 2026 dollar bond with coupons due this Friday, triggering a 30-day grace period before Russia could potentially slip into default.

European Union states have reported the freezing of about 23 billion euros ($24.5 billion) of assets of the Russian Central Bank, a top EU official said on Wednesday, revealing for the first time a figure that was expected to be much higher, Reuters reported. Russia has publicly said that Western sanctions led to the freezing of about $300 billion of its central bank's assets globally.

Some 62 million barrels of Russia's flagship Urals crude oil, a record amount, are sitting in vessels at sea, data from energy analytics firm Vortexa showed, as traders struggled to find buyers for the crude, Reuters reported. The United States and other countries have banned imports of Russian crude and oil products over its invasion of Ukraine, and others have avoided acquiring cargoes out of fear of future sanctions. The European Commission is considering an embargo of Russian oil.