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Russia's Eurobond default, as seen on 1 July 2022
Summary
A look back at the Taiwanese-owned Eurobond default of 27 June 2022 and why Moscow called it a farce.
What did Russia's default on two Eurobonds actually change? On 1 July 2022, the question was still fresh, days after the 27 June deadline passed.
As reported at the time, Russia defaulted on two Taiwanese-owned Eurobonds worth US$100 million. Western sanctions had led Euroclear to block Russian attempts to service the debt before the deadline. Moscow described the default as artificially manufactured and called it a farce.
Few immediate consequences
The practical effect looked limited. Russia was already unable to borrow internationally because of the SWIFT ban on Russian banks, so a default closed off little that was still open.
A default of technicalities
Later accounts of the episode put it in wider context. Russia defaulted on certain foreign-currency debt on 27 June 2022 because sanctions and disrupted payment and clearing channels stopped bondholders receiving funds. It was widely described as Russia's first foreign sovereign debt default since 1918. The default arose from technicalities: dollar payment was impossible under US and EU sanctions, and it did not mark an actual inability to pay.
Earlier, on 2 June, Russia had missed a payment of $1.9 million. That was not enough to trigger a cross-default across other instruments, which requires at least $75 million, according to documents for other Russian Eurobonds.
The two sides therefore framed the same event differently. Moscow blamed manufactured obstacles, while the blocked payment channels meant the money could not reach bondholders.
