After talks with his counterparts on Monday, Germany’s Robert Habeck indicated that energy ministers from the Group of Seven industrialized nations reject President Vladimir Putin’s demands that “unfriendly” countries pay for Russian gas in roubles.
After a virtual meeting with G7 energy ministers, Habeck, Germany’s economy and climate protection minister, said, “All G7 ministers have agreed that this is a unilateral and unambiguous breach of existing treaties.”
“The concluded contracts are genuine, and the companies should and must respect them,” he said. “Payment in roubles is unacceptable, and we call on the enterprises concerned not to comply with Putin’s demand,” he added. Moreover, he said that Putin’s attempt to separate is apparent; however, they will not be divided.
Outlook on The Russian Economy
On Tuesday, the Russian finance ministry announced that it had fully paid a coupon on the country’s Eurobond due in 2035; the third such payment since unprecedented Western sanctions questioned Moscow’s capacity to service foreign currency debt.
The ministry announced that it had channeled $102 million to Russia’s National Settlement Depository for the Eurobond coupon payout (NSD). “The Russian finance minister has properly implemented its obligations to service Russian Federation sovereign securities under the Eurobond prospectus,” the ministry stated; however, it did not specify if the payment was transferred to Euroclear or passed on to foreign Eurobond holders. According to a source familiar with the issue, JPMorgan Chase, a correspondent bank, handled the transaction. The settlement with investors takes place through the NSD and Euroclear; “if, for reasons beyond its control, the Russian Federation is unable to make payments… in US dollars,” settlement may take place in euros, pound sterling, Swiss francs, or Russian roubles, according to the Eurobond prospectus.
Euroclear and NSD did not react to a request for comment right away. Russia paid $117 million in interest on two government Eurobonds in mid-March. Another $66 million coupon was due on another issue last week. Russia has another $4.4 billion in external debt redemptions due for the rest of the year, excluding this Monday’s coupon. Several corporate borrowers have also experienced payment delays.
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