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Russia's Eurobond default: what happened on 27 June
Summary
A look back at the missed payments on two Taiwanese-owned Eurobonds and the dispute over who was to blame.
Why did a default on just US$100 million of debt draw such attention? The question goes back to 28 June 2022, the day after Russia defaulted on two Eurobonds owned by Taiwanese holders, with a combined value of US$100 million.
As reported at the time, Western sanctions had led Euroclear to block Russian attempts to service the debt before the deadline on 27 June. Moscow described the default as artificially manufactured and "a farce".
Few immediate consequences
The default was expected to have few immediate consequences for Russia. The country was already unable to borrow internationally because of the SWIFT ban on Russian banks.
A matter of channels, not means
Later accounts described the event as Russia's first foreign sovereign debt default since 1918, though the country had defaulted on domestic ruble-denominated government debt in 1998. They also noted that sanctions and disrupted payment and clearing channels prevented bondholders from receiving funds. Payment in dollars was impossible under US and EU sanctions, so the default arose from technicalities and did not mark an actual lack of capability to pay.
There had been an earlier lapse. On 2 June, Russia failed to pay $1.9 million in interest after incorrectly not counting the grace period. That amount fell short of the $75 million minimum needed to trigger a cross-default across other instruments.
