Russia’s Rosselkhozbank says sanctions are hampering efforts to meet debt obligations

A man walks past a branch of Rosselkhozbank in Moscow, January 23, 2015. REUTERS/Maxim Zmeyev (RUSSIA – Tags: BUSINESS POLITICS)

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April 20 (Reuters) – Russia’s state-owned lender Rosselkhozbank said on Wednesday that British sanctions had prevented it from paying $21.25 million in interest on Eurobonds maturing in 2023, the latest Russian company to have reported debt service issues.

Unprecedented Western sanctions against Moscow for what it calls “a special military operation” in Ukraine have crippled Russia’s financial system and pushed the country to the brink of its first major default on foreign bonds since the Bolshevik Revolution of 1917.

Citing UK sanctions, agriculture lender Rosselkhozbank said it failed to pay $21.25 million in interest to its Luxembourg subsidiary RSHB Capital SA under a subordinated loan agreement.

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Payment for the $500 million Eurobond maturing in 2023 was due on April 16.

Rosselkhozbank said payments agent BNY Mellon in London had not confirmed it was ready to accept payment and make interest payments through clearinghouses until it received further instructions from UK regulators.

BNY Mellon did not immediately respond to a Reuters request for comment.

“The bank confirms that it has sufficient liquidity to meet its obligations, including interest payments due on April 16, 2022, and is doing everything possible to service its debt,” Rosselkhozbank said.

British sanctions against Rosselkhozbank and Russian banks that lost their international credit ratings after Feb. 24 have clouded the lender’s outlook. But Russian rating agency ACRA still rates Rosselkhozbank at AA level with a stable outlook.

Rosselkhozbank regularly receives state support to continue lending to the country’s agricultural sector, which has been boosted by Russia’s ban on most imports from Western countries in response to the imposition of sanctions against Moscow in 2014.

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Reuters reporting; Editing by Kim Coghill

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