Russia on verge of default after making payments in rubles, Moody’s warns

A leading credit agency warned Friday that Russia is on the verge of defaulting on its debt obligations — the latest sign that escalating Western sanctions over the Ukraine war could do lasting damage to the Russian economy.

Russia violated the terms of two bond contracts with installments due on April 4 by paying in rubles rather than dollars, according to Moody’s. The dollar-denominated bonds are respectively set to mature in 2022 and 2042.

Moody’s noted the use of rubles “represents a change in payment terms relative to the original bond contracts and therefore may be considered a default under Moody’s definition if not cured by 4 May, which is the end of the grace period.”

“The bond contracts have no provision for repayment in any other currency other than dollars,” the credit agency added.

If Russia does default on its debt payments, it will mark the first lapse of its kind on foreign obligations for the Kremlin since the Bolshevik revolution of 1917, according to Reuters.

Russia has narrowly avoided defaults at least twice since the war began — most recently with a $447 million payment on its foreign debt earlier this month. But the Biden administration recently moved to block Russia from paying holders of its sovereign debt more than $600 million from reserves held at American banks.

Experts previously told The Post that Russia was likely to default on a $2.2 billion bill due on April 4 — which was required to be paid in dollars.

The US and Western allies have effectively disconnected Russia from the global economy with various sanctions since Russian President Vladimir Putin ordered the invasion of Ukraine in late February.

The penalties have included the ejection of Russian banks from the SWIFT international payments system and sanctions against various financial institutions and businesses.

Russian officials warned in March that the West had frozen roughly $300 billion of its $640 billion in gold and foreign currency reserves.

Russian Finance Minister Anton Siluanov told the Kremlin-friendly Izvestia newspaper that Moscow would pursue legal action if it defaulted. Meanwhile, Putin has required that European nations pay for Russian oil and gas in rubles — a move widely seen as an effort to prop up the currency.

With Post wires