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Belarus’ rouble payment of foreign-currency debt is default: Moody’s

Belarus’ move to pay Belarusian roubles on its dollar-denominated bonds constituted a default, Moody’s said on Thursday, pointing to a coupon paid on the USD 600 million 10-year Eurobond maturing in 2027 (BY163436922=).

Holders did not receive USD 23 million in coupon payments after the 14-day grace period expired as “the government opted to make the payments in Belarusian roubles, which we consider an event of default under our definition,” Moody’s said.

Mirroring similar steps taken earlier by Russia, Belarus said last month it would be servicing its Eurobond debt in its own currency – Belarusian roubles. The Minsk regime justified its decision by pointing the finger of blame at Western sanctions limiting its ability to deal in foreign currencies.

“Further defaults on future debt payments are likely following this latest resolution and a decree… which provided for the possibility to settle Belarus foreign-currency debt obligations, which amount to more than 97 percent of total government debt, in Belarusian roubles,” Moody’s said.

The agency said Belarus is to pay USD 38.6 million in two coupons on August 24 and another USD 46 million on August 28. However, its next big redemption comes next year when it has to pay USD 1.6 billion on two Eurobonds due in 2023.

Belarus’ response

On Friday, Belarus’ finance ministry called Moody’s statement “provocative”, adding that it aimed at creating an artificial shock over its Eurobonds.

The ministry went on to explain itself by saying that “the Belarusian side has made and will make every effort and will do everything possible to ensure that these rights of the holders of Eurobonds, who trust the Republic of Belarus, are exercised on an alternative basis.”

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