Russia

Russian steel and mining company Severstal has received permission from Moscow to make a $12.6 million interest payment due Wednesday on its dollar bonds, but the firm warned that paying and transfer agent Citigroup Inc. may refrain from processing the transaction, Bloomberg reported. “At the moment we certify that there are no obstacles from Russian law side for the company to make the payment,” Severstal said in a Wednesday filing. But, it added, “given the recent developments around the company, we have grounds to believe that” Citigroup won’t process the coupon payment.

Annual inflation in Russia accelerated to 12.54% as of March 11, its highest since late 2015 and up from 10.42% a week earlier, the economy ministry said on Wednesday, with the weakening rouble sending prices soaring amid unprecedented Western sanctions, Reuters reported. Inflation accelerated sharply as the currency fell to an all-time low and amid signs of increased demand for a wide range of goods, from food staples to cars, on expectations that their prices will rise further.

Russia is due to pay $117 million in interest on two dollar-denominated sovereign bonds on Wednesday — the first such payments since its invasion of Ukraine which sparked a raft of sanctions from Western capitals and countermeasures from Moscow, according to a Reuters analysis. Russia's finance ministry said on Monday it had sent an order to a correspondent bank for the payment of coupons on eurobonds amounting to $117.2 million, which are due on Wednesday.

Credit ratings agency Fitch said on Tuesday that if Russia were to make two U.S. dollar bond coupon payments due Wednesday in roubles, it would constitute a sovereign default after a grace period expiration, Reuters reported. Russia's invasion of Ukraine last month triggered sanctions from across the world that have limited Moscow's ability to access and allocate cash. "The payment in local currency of Russia's U.S. dollar Eurobond coupons due on 16 March would, if it were to occur, constitute a sovereign default, on expiry of the 30-day grace period," Fitch said in a statement.

The invasion of Ukraine has placed Russia on the verge of bankruptcy, the Economic Times of India reported. Interest rates have doubled, the stock market has closed, and the rouble has fallen to its lowest level ever. The military costs of war have been exacerbated by an unprecedented level of international sanctions, sustained by a large coalition of countries. Russian citizens, now unable to spend at IKEA, McDonald's or Starbucks, are not allowed to convert any of the money they do have into foreign currency.

Russia's finance minister has confessed that nearly half of the country's foreign exchange reserves, which are viewed as a critical instrument for resisting Western economic sanctions, are insufficient, Wio News reported. According to a report by Interfax, the independent Russian news agency, Anton Siluanov said in an interview with Russian state television on Sunday that Russia had about $640 billion in foreign reserves, with about $300 billion of that amount frozen due to sanctions imposed by the U.S., Europe and other Western nations.

Hundreds of foreign companies have announced a partial or total withdrawal from Russia in recent weeks amid continuing fighting in Ukraine, The Bell reported. These include Apple, IKEA, McDonald’s, Microsoft, IBM, Sony, Shell, Porsche, Volkswagen, H&M, Inditex (that includes Zara, Bershka, Massimo Dutti, Pull&Bear), Procter & Gamble (that covers brands including Tide, Ferry, Pampers and Head & Shoulders), Universal, Mars, Warner and Sony Music.