A controversial accounting event emerged from the 2022 Russia-2022 Eurobond payments, with a $1.9 million designation labeled as a nonpayment by the Credit Derivatives Determination Committees (CDDC) within the International Swaps and Derivatives Association (ISDA), as reported by Reuters.
The ISDA decision appeared on its website on June 1, and the CDDC members, comprising hundreds of large international financial institutions, banks, and other market players, concluded that the Russian Federation failed to make a payment on May 19, 2022. In market terms, this is described as a Payment Error, a technical event that equates to a default for purposes of triggering payments on credit default swaps and related insurance contracts. Investors who had purchased Eurobonds with 2022 maturities and held futures on the issue argued that Russia underpaid the interest due, leading to calls for a formal default declaration.
The Russian Ministry of Finance later stated that sovereign Eurobond obligations tied to the Russia-2022 and Russia-2042 issues were settled, albeit for a total of 649.2 million rubles in amounts that were due originally. The handling of dollar-denominated payments was complicated by sanctions after the U.S. Treasury halted access to dollars from Russian accounts held in U.S. banks in early April, complicating debt servicing in the global market. Bloomberg noted the use of in-dollar reserves that were not subject to sanctions as a partial workaround, underscoring the pressure Moscow faced from international authorities and credit-rating agencies after the grace period ended on May 4.
Earlier statements from investors claimed that the Ministry of Finance redeemed Eurobonds outside the agreed date frame, noting that the principal and interest were paid on May 2 instead of the scheduled date of April 4, according to the CDDC. As a result, holders of these bonds argued they were entitled to additional interest, the same 1.9 million dollars, which remained unpaid. The terms of the issue require interest to accrue until the original amount is repaid in full.
On May 30, Finance Minister Anton Siluanov announced a broader plan to restructure foreign debt and align it with a payment framework that mirrors Russia’s approach to natural gas settlements. The proposal aims to bypass Western settlement infrastructure by routing all payments through the National Settlement Depository rather than traditional international channels. In describing the U.S. Treasury’s decision not to renew a license for Russia to service public debt, the minister dismissed the move as an exotic measure. This context helped shape expectations for future Eurobond payments, with Bloomberg noting that upcoming payments for the June 23 maturity would be made in a structure allowing options for alternative currencies, including euros, British pounds, or Swiss francs, alongside the traditional U.S. dollar settlement.