REUTERS
"Germany triggers gas alarm stage, accuses Russia of 'economic attack'"
By Holger Hansen, Vera Eckert
JUNE 23, 2022
BERLIN (Reuters) - Germany triggered the “alarm stage” of its emergency gas plan on Thursday in response to falling Russian supplies but stopped short of allowing utilities to pass on soaring energy costs to customers in Europe’s largest economy.
The measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc’s dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.
The step is a largely symbolic signal to companies and households but marks a major shift for Germany, which cultivated strong energy ties with Moscow stretching back to the Cold War.
Lower gas flows sparked warnings this week that Germany could fall into recession if Russian supplies halted altogether.
A survey on Thursday showed the economy losing momentum in the second quarter.
“We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin,” Economy Minister Robert Habeck said in a statement.
Gas rationing would hopefully be avoided but cannot be ruled out, Habeck said:
“From now on, gas is a scarce commodity in Germany ..."
"We are therefore now obliged to reduce gas consumption, now already in summer.”
Russia has denied the supply cuts were deliberate, with state supplier Gazprom blaming a delay in the return of serviced equipment caused by Western sanctions.
The Kremlin on Thursday said Russia “strictly fulfils all its obligations” to Europe.
Berlin will provide a 15 billion euro ($15.76 billion) credit line to fill gas storage and launch a gas auction model this summer to encourage industrial users to save gas.
The second “alarm stage” of a three-stage emergency plan means authorities see a high risk of long-term supply shortages.
It includes a clause allowing utilities to immediately pass on high prices to industry and households.
Habeck said Germany was not at that point, but the clause might get triggered if the supply squeeze and price gains persisted, pushing power companies deeper into the red.
“If this minus becomes so big that the companies can’t bear it any more and they fall down, the whole market threatens to fall down at some point - so a Lehman Brothers effect in the energy system,” he said, referring to the U.S. investment bank’s 2008 collapse that rippled through global financial markets.
Local utility association VKU asked the government to protect consumers with subsidies or risk utilities going bust because of low-income retail customers defaulting on payments.
The President of the Federal Network Agency, Klaus Mueller, believed it was possible for consumer prices for gas to triple.
“If you extrapolate it, it depends a lot on how you heat, how your building is built, but it can triple the previous gas bill,” he told RTL/ntv broadcasters.
The move to Phase 2 had been anticipated since Gazprom cut flows via the Nord Stream 1 pipeline across the Baltic Sea to just 40% of capacity last week.
Data released on Thursday showed Germany has imported 22% less natural gas in the first four months of 2022 but the cost surged 170% over the same period.
Facing dwindling deliveries from main supplier Russia, Germany has since late March been at Phase 1, which includes stricter monitoring of daily flows and a focus on filling gas storage facilities.
“The declaration of the alarm stage does not immediately change the fundamental status quo,” German energy provider E.ON said.
It was important, though, that the government was preparing and taking steps to stabilize markets and gas supply, it said an emailed statement to Reuters.
RISK OF FULL DISRUPTION
In the second stage, the market is still able to function without the need for state intervention that would kick in the final emergency stage.
Nord Stream 1 is due to undergo maintenance on July 11-21 when flows will stop.
Hanns Koenig of consultancy Aurora Energy Services in Berlin said Gazprom might find reasons to drag out the process.
“Extended maintenance of Nord Stream 1 would further tighten the market and make it harder to fill gas storage until winter."
"This is of course in Russia’s strategic interest.”
Russia may cut off gas to Europe entirely to bolster its political leverage, the head of the International Energy Agency (IEA) warned on Wednesday, urging Europe to prepare now.
Russian gas flows to Europe via Nord Stream 1 and through Ukraine were stable on Thursday, while reverse flows on the Yamal pipeline edged up, operator data showed.
Dutch wholesale gas prices, the European benchmark, rose as much as 8% on Thursday.
Several countries have outlined measures to withstand a supply squeeze and avert winter energy shortages and an inflation spike that could test Europe’s resolve to maintain sanctions on Russia.
Supply cuts have driven German companies to contemplate painful production cuts and resorting to polluting energy sources previously considered unthinkable.
The European Union and Norway unveiled a deal on Thursday allowing the bloc to tap more gas from western Europe’s biggest producer.
The EU also signalled a temporary return to coal to plug the gap after calling Moscow’s gas supply cuts “rogue moves.”
Its climate policy chief Frans Timmermans said 10 of the EU’s 27 member countries have issued an “early warning” on gas supply - the first of three crisis levels.
“The risk of full gas disruption is now more real than ever before,” he said.
Reporting by Holger Hansen, Christoph Steitz, Christian Kraemer, Vera Eckert, Tom Sims, Marwa Rashad, Kate Abnett, Nora Buli, Tom Käckenhoff, Paul Carrel, Miranda Murray and Riham Alkousaa; writing by Matthias Williams; Editing by Tomasz Janowski, Elaine Hardcastle
https://www.reuters.com/article/ukraine ... SKBN2O40C2
RUSSIA
Re: RUSSIA
BUSINESS INSIDER
"Russian lawmaker calls for airstrikes on US Embassy in Kyiv, revenge for giving Ukraine long-range artillery"
sankel@businessinsider.com (Sophia Ankel)
24 JUNE 2022
* Russian lawmaker Yury Shvytkin on Thursday called for an attack on the US Embassy in Kyiv.
* He told Lenta.ru that Russia must respond "harshly" after new US weaponry arrived in Ukraine.
* Shvytkin has no power to order a strike, but his words reflect an animosity common in Russia.
A Russian lawmaker on Thursday called for airstrikes on the US Embassy in Kyiv after Ukraine received a new batch of American long-range artillery.
Yury Shvytkin, the deputy chairman of the Russian parliament's defense committee, made the suggestion in an interview with the Russian news outlet Lenta.ru.
He said that the US delivery of the High Mobility Artillery Rocket Systems (HIMARS) to Ukraine "emphasizes the step-by-step movement towards a third world war."
"One must understand that we must react harshly."
"In my view, we should also react to those countries that are supplying weapons," Shvytkin told Lenta.ru.
"The main center of decision-making is the US Embassy," Shvytkin continued.
"My position is that we need to destroy the government quarter in Kyiv, we need to destroy the relevant points."
"We will not stand by and watch this mess."
"While they slap us on the one cheek, we will not turn the other."
He did not immediately respond to Insider's request for comment.
Shvytkin does not have any power to order such a strike — the invasion is being run by President Vladimir Putin and his generals.
But his words reflect a deep animosity in Russia to Ukraine's Western allies, which have slowed Russia's advance by providing advanced weaponry.
Russian officials repeatedly warned that such deliveries would escalate the war, and even said they would consider Western forces helping deliver arms to be fair targets for an attack.
Embassies of third countries are generally considered not to be fair targets for attack.
His comments come after Ukraine confirmed that it had received four HIMARS from the US on Thursday.
"HIMARS have arrived to Ukraine."
"Thank you to my colleague and friend @SecDef Lloyd J. Austin III for these powerful tools!"
"Summer will be hot for russian occupiers."
"And the last one for some of them," Ukraine's Defense Minister Oleksii Reznikov tweeted Thursday.
The US was initially reluctant to give Ukraine weapons that could reach beyond its own borders into Russia, but went ahead after Ukraine promised to limit their use.
In response to Ukraine's assurance, Shvytkin told Lenta.ru: "This is the range that allows reaching the territory of our country.
"Although Ukrainian President Volodymyr Zelenskyy has sworn to the US that he will not launch strikes on Russian territory, we cannot trust him in any way."
Shvytkin — alongside other Putin allies — has repeatedly made threatening bombastic threats around the war.
Last month, he warned that Finland and Sweden's decision to apply for NATO membership could move Russia closer to a "nuclear disaster."
https://www.msn.com/en-us/news/world/ru ... 66bc7ceca9
"Russian lawmaker calls for airstrikes on US Embassy in Kyiv, revenge for giving Ukraine long-range artillery"
sankel@businessinsider.com (Sophia Ankel)
24 JUNE 2022
* Russian lawmaker Yury Shvytkin on Thursday called for an attack on the US Embassy in Kyiv.
* He told Lenta.ru that Russia must respond "harshly" after new US weaponry arrived in Ukraine.
* Shvytkin has no power to order a strike, but his words reflect an animosity common in Russia.
A Russian lawmaker on Thursday called for airstrikes on the US Embassy in Kyiv after Ukraine received a new batch of American long-range artillery.
Yury Shvytkin, the deputy chairman of the Russian parliament's defense committee, made the suggestion in an interview with the Russian news outlet Lenta.ru.
He said that the US delivery of the High Mobility Artillery Rocket Systems (HIMARS) to Ukraine "emphasizes the step-by-step movement towards a third world war."
"One must understand that we must react harshly."
"In my view, we should also react to those countries that are supplying weapons," Shvytkin told Lenta.ru.
"The main center of decision-making is the US Embassy," Shvytkin continued.
"My position is that we need to destroy the government quarter in Kyiv, we need to destroy the relevant points."
"We will not stand by and watch this mess."
"While they slap us on the one cheek, we will not turn the other."
He did not immediately respond to Insider's request for comment.
Shvytkin does not have any power to order such a strike — the invasion is being run by President Vladimir Putin and his generals.
But his words reflect a deep animosity in Russia to Ukraine's Western allies, which have slowed Russia's advance by providing advanced weaponry.
Russian officials repeatedly warned that such deliveries would escalate the war, and even said they would consider Western forces helping deliver arms to be fair targets for an attack.
Embassies of third countries are generally considered not to be fair targets for attack.
His comments come after Ukraine confirmed that it had received four HIMARS from the US on Thursday.
"HIMARS have arrived to Ukraine."
"Thank you to my colleague and friend @SecDef Lloyd J. Austin III for these powerful tools!"
"Summer will be hot for russian occupiers."
"And the last one for some of them," Ukraine's Defense Minister Oleksii Reznikov tweeted Thursday.
The US was initially reluctant to give Ukraine weapons that could reach beyond its own borders into Russia, but went ahead after Ukraine promised to limit their use.
In response to Ukraine's assurance, Shvytkin told Lenta.ru: "This is the range that allows reaching the territory of our country.
"Although Ukrainian President Volodymyr Zelenskyy has sworn to the US that he will not launch strikes on Russian territory, we cannot trust him in any way."
Shvytkin — alongside other Putin allies — has repeatedly made threatening bombastic threats around the war.
Last month, he warned that Finland and Sweden's decision to apply for NATO membership could move Russia closer to a "nuclear disaster."
https://www.msn.com/en-us/news/world/ru ... 66bc7ceca9
Re: RUSSIA
ASSOCIATED PRESS
"Russia strikes Kyiv as troops consolidate gains in the east"
By OLEKSANDR STASHEVSKYI, Associated Press
26 JUNE 2022
KYIV, Ukraine (AP) — Russia attacked the Ukrainian capital in the early hours of Sunday morning, striking at least two residential buildings, Kyiv Mayor Vitali Klitschko said, as elsewhere Russian troops consolidated their gains in the east.
Associated Press journalists in Kyiv saw rescue services battling flames and rescuing civilians.
Klitschko said four people were hospitalized with injuries and a 7-year-old girl was pulled alive from the rubble.
Ukraine Member of Parliament Oleksiy Goncharenko wrote on the Telegram messaging app that “according to prelim data 14 missiles were launched against Kyiv region and Kyiv.”
Before Sunday’s early morning attack, Kyiv had not faced any such Russian airstrikes since June 5.
Klitschko told journalists that he believed “it is maybe a symbolic attack” ahead of this week's NATO summit in Madrid.
Two more explosions were later heard in Kyiv, but their cause and possible casualties were not immediately clear.
Meanwhile, Russian forces have been seeking to swallow up the last remaining Ukrainian stronghold in the eastern Luhansk region, pressing their momentum after taking full control Saturday of the charred ruins of Sievierodonetsk and the chemical plant where hundreds of Ukrainian troops and civilians had been holed up.
Serhiy Haidai, governor of the Luhansk region that includes Sievierodonetsk, said Sunday that Russia was conducting intense airstrikes on the adjacent city of Lysychansk, destroying its television tower and seriously damaging a road bridge.
“There's very much destruction — Lysychansk is almost unrecognizable,” he wrote on Facebook.
Also Sunday, U.S. President Joe Biden said the United States and other Group of Seven leading economies intend to announce a ban on imports of gold from Russia.
They hope that measure will further isolate Russia economically over its invasion of Ukraine.
Senior Biden administration officials said gold is Moscow’s second largest export after energy, and that banning imports would make it more difficult for Russia to participate in global markets.
Biden’s Twitter feed said Russia “rakes in tens of billions of dollars” from the sale of its gold, its second largest export after energy.
On Saturday, Russia also launched dozens of missiles on several areas across the country far from the heart of the eastern battles.
Some of the missiles were fired from Russian long-range Tu-22 bombers deployed from Belarus for the first time, Ukraine’s air command said.
The bombardment preceded a meeting between Russian President Vladimir Putin and Belarusian President Alexander Lukashenko, during which Putin announced that Russia planned to supply Belarus with the Iskander-M missile system.
Russian Defense Ministry spokesman Igor Konashenkov said late Saturday that Russian and Moscow-backed separatist forces now control Sievierodonetsk and the villages surrounding it.
He said the attempt by Ukrainian forces to turn the Azot plant into a “stubborn center of resistance” had been thwarted.
Haidai confirmed Saturday that Sievierodonetsk had fallen to Russian and separatist fighters, who he said were now trying to blockade Lysychansk from the south.
Russia’s Interfax news agency quoted a spokesman for the separatist forces, Andrei Marochko, as saying Russian troops and separatist fighters had entered Lysychansk and that fighting was taking place in the heart of the city.
There was no immediate comment on the claim from the Ukrainian side.
Lysychansk and Sievierodonetsk have been the focal point of a Russian offensive aimed at capturing all of the Donbas and destroying the Ukrainian military defending it — the most capable and battle-hardened segment of the country’s armed forces.
Capturing Lysychansk would give Russian forces control of every major settlement in the province, a significant step toward Russia’s aim of capturing the entire Donbas.
The Russians and separatists control about half of Donetsk, the second province in the Donbas.
___
Follow AP’s coverage of the Russia-Ukraine war at https://apnews.com/hub/russia-ukraine
https://www.msn.com/en-us/news/world/ru ... 25982355a2
"Russia strikes Kyiv as troops consolidate gains in the east"
By OLEKSANDR STASHEVSKYI, Associated Press
26 JUNE 2022
KYIV, Ukraine (AP) — Russia attacked the Ukrainian capital in the early hours of Sunday morning, striking at least two residential buildings, Kyiv Mayor Vitali Klitschko said, as elsewhere Russian troops consolidated their gains in the east.
Associated Press journalists in Kyiv saw rescue services battling flames and rescuing civilians.
Klitschko said four people were hospitalized with injuries and a 7-year-old girl was pulled alive from the rubble.
Ukraine Member of Parliament Oleksiy Goncharenko wrote on the Telegram messaging app that “according to prelim data 14 missiles were launched against Kyiv region and Kyiv.”
Before Sunday’s early morning attack, Kyiv had not faced any such Russian airstrikes since June 5.
Klitschko told journalists that he believed “it is maybe a symbolic attack” ahead of this week's NATO summit in Madrid.
Two more explosions were later heard in Kyiv, but their cause and possible casualties were not immediately clear.
Meanwhile, Russian forces have been seeking to swallow up the last remaining Ukrainian stronghold in the eastern Luhansk region, pressing their momentum after taking full control Saturday of the charred ruins of Sievierodonetsk and the chemical plant where hundreds of Ukrainian troops and civilians had been holed up.
Serhiy Haidai, governor of the Luhansk region that includes Sievierodonetsk, said Sunday that Russia was conducting intense airstrikes on the adjacent city of Lysychansk, destroying its television tower and seriously damaging a road bridge.
“There's very much destruction — Lysychansk is almost unrecognizable,” he wrote on Facebook.
Also Sunday, U.S. President Joe Biden said the United States and other Group of Seven leading economies intend to announce a ban on imports of gold from Russia.
They hope that measure will further isolate Russia economically over its invasion of Ukraine.
Senior Biden administration officials said gold is Moscow’s second largest export after energy, and that banning imports would make it more difficult for Russia to participate in global markets.
Biden’s Twitter feed said Russia “rakes in tens of billions of dollars” from the sale of its gold, its second largest export after energy.
On Saturday, Russia also launched dozens of missiles on several areas across the country far from the heart of the eastern battles.
Some of the missiles were fired from Russian long-range Tu-22 bombers deployed from Belarus for the first time, Ukraine’s air command said.
The bombardment preceded a meeting between Russian President Vladimir Putin and Belarusian President Alexander Lukashenko, during which Putin announced that Russia planned to supply Belarus with the Iskander-M missile system.
Russian Defense Ministry spokesman Igor Konashenkov said late Saturday that Russian and Moscow-backed separatist forces now control Sievierodonetsk and the villages surrounding it.
He said the attempt by Ukrainian forces to turn the Azot plant into a “stubborn center of resistance” had been thwarted.
Haidai confirmed Saturday that Sievierodonetsk had fallen to Russian and separatist fighters, who he said were now trying to blockade Lysychansk from the south.
Russia’s Interfax news agency quoted a spokesman for the separatist forces, Andrei Marochko, as saying Russian troops and separatist fighters had entered Lysychansk and that fighting was taking place in the heart of the city.
There was no immediate comment on the claim from the Ukrainian side.
Lysychansk and Sievierodonetsk have been the focal point of a Russian offensive aimed at capturing all of the Donbas and destroying the Ukrainian military defending it — the most capable and battle-hardened segment of the country’s armed forces.
Capturing Lysychansk would give Russian forces control of every major settlement in the province, a significant step toward Russia’s aim of capturing the entire Donbas.
The Russians and separatists control about half of Donetsk, the second province in the Donbas.
___
Follow AP’s coverage of the Russia-Ukraine war at https://apnews.com/hub/russia-ukraine
https://www.msn.com/en-us/news/world/ru ... 25982355a2
Re: RUSSIA
REUTERS
"The 'Big Package': How Russia was driven to default"
By Marc Jones
JUNE 27, 2022
LONDON (Reuters) - Russia’s first major international debt default in over a century, which Washington said became a fact on Monday, follows months of co-ordinated Western sanctions that left Moscow with cash but no access to the international financial network.
Below is a summary of the key moments that have led up to this point.
THE “BIG PACKAGE”
At around 11.30 p.m. (2230 GMT) on Feb. 25, the day after Russian troops entered Ukraine, European Union’s experts in Brussels said a set of sanctions they had worked on for days, or the “Big Package” as they called it, was ready.
Just before midnight, the European Commission announced the measures.
While emergency Group of Seven and EU meetings earlier made clear a response was coming, the package named Vladimir Putin and his top diplomat Sergei Lavrov personally, and, as it later became clear, froze some $300 billion of the Russian central bank’s reserves.
“That was really the moment when we said, okay, well we’ve done it,” one European source told Reuters.
“That was, I think, a very pivotal moment for a lot of people around a table.”
SWIFT ACTION
Days later, on March 2, the EU struck again by banning seven Russian banks from SWIFT, an international financial messaging system crucial for cross-border transactions.
Booting Russian lenders from SWIFT had long been considered a ‘nuclear option,’ but the invasion put it on the table and when the EU decided to activate it, those at SWIFT headquarters just outside Brussels were ready.
The only question was how long they had to implement the move, “five days or five minutes?” another source said.
In the end is was 10-12 days.
FIRST CUTS, BUT NOT THE DEEPEST
Credit rating agency, S&P Global, already stripped Moscow of its coveted investment grade rating on Feb. 26 and Russian bonds were slumping, but a heavier blow followed on March 15, when the EU told top credit agencies to stop rating Russian dept or risk losing their licenses to operate in the bloc.
“We were caught flat-footed, certainly we were not given any advanced warning,” one senior rating agency analyst said.
“Basically the question was, does this mean we can’t rate Russia any more?”
It turned out the answer was yes.
DEFAULT DEADLINE ONE
With so many hurdles being erected, expectations built that Russia would default on its first post-sanctions’ bond payments either on March 16, or a month later at the end of a 30-day “grace period.”
However, a special “waiver” in the U.S. sanctions granted by the Treasury’s Office of Foreign Assets Control allowed payments to go through.
UNINTENDED CONSEQUENCES
On April 8, a week before the EU ban on Russian ratings was due to come into force, S&P declared Russia in “selective default” after Moscow said it planned to make upcoming bond payments in roubles rather than dollars, their issue currency.
On May 3 though, shortly before the payment was due, the Kremlin U-turned and paid in dollars.
SHOCK TO THE SYSTEM
Days later, Russia had stumbled, though.
On May 11, sharp-eyed creditors spotted that Moscow had failed to add $1.9 million of extra interest that had built up on bonds that only got paid in their grace periods rather than on time.
They contacted the clearing house Euroclear and then bond market equivalent of an insurance payment arbiter - the Credit Derivative Determinations Committee here which ruled that a "credit event" had happened.
The sum was too small to trigger default clauses in all of Russia’s international bonds, but it did mean some investors expected to receive default insurance payments.
But when the U.S. Treasury clarified on its website that buying Russian bonds on the open, or ‘secondary’ market, was banned, that credit default swap (CDS) insurance process had to be halted as it was no longer clear what to do with the bonds involved.
“It is a bit like if your house burns down and the insurance company turns around and claims it was the wrong kind of fire,” said Joe Delvaux, emerging markets distressed debt portfolio manager at Europe’s largest fund manager Amundi.
“The reality is that these sanctions are a shock to the system.”
INTENDED CONSEQUENCES
The step that made Russia’s default unavoidable though was Washington’s May 24 decision to let the waiver that had allowed U.S. bondholders to receive Russia’s payments, expire.
A week later, the EU also sanctioned Russia’s domestic paying agent, its National Settlement Depository (NSD), which it had been using to make the payments.
Moscow has blamed the West for forcing an “artificial default”, with its finance minister Anton Siluanov calling the situation a “farce.”
However, veteran global policymakers involved in the process say the sanctions are unprecedented but fully justified.
“They were very significant actions that responded to the magnitude of the actions that Russia undertook,” Agustin Carstens, the head of the world’s central bank umbrella body, the Bank for International Settlements, said.
Additional reporting by John O’Donnell in Frankfurt, Francesco Guarascio in Brussels, Andrew MacAskill, Karin Strohecker and Vincent Flasseur in London and Gavin Jones in Milan; Editing by Tomasz Janowski
https://www.reuters.com/article/ukraine ... SL8N2YE3N4
"The 'Big Package': How Russia was driven to default"
By Marc Jones
JUNE 27, 2022
LONDON (Reuters) - Russia’s first major international debt default in over a century, which Washington said became a fact on Monday, follows months of co-ordinated Western sanctions that left Moscow with cash but no access to the international financial network.
Below is a summary of the key moments that have led up to this point.
THE “BIG PACKAGE”
At around 11.30 p.m. (2230 GMT) on Feb. 25, the day after Russian troops entered Ukraine, European Union’s experts in Brussels said a set of sanctions they had worked on for days, or the “Big Package” as they called it, was ready.
Just before midnight, the European Commission announced the measures.
While emergency Group of Seven and EU meetings earlier made clear a response was coming, the package named Vladimir Putin and his top diplomat Sergei Lavrov personally, and, as it later became clear, froze some $300 billion of the Russian central bank’s reserves.
“That was really the moment when we said, okay, well we’ve done it,” one European source told Reuters.
“That was, I think, a very pivotal moment for a lot of people around a table.”
SWIFT ACTION
Days later, on March 2, the EU struck again by banning seven Russian banks from SWIFT, an international financial messaging system crucial for cross-border transactions.
Booting Russian lenders from SWIFT had long been considered a ‘nuclear option,’ but the invasion put it on the table and when the EU decided to activate it, those at SWIFT headquarters just outside Brussels were ready.
The only question was how long they had to implement the move, “five days or five minutes?” another source said.
In the end is was 10-12 days.
FIRST CUTS, BUT NOT THE DEEPEST
Credit rating agency, S&P Global, already stripped Moscow of its coveted investment grade rating on Feb. 26 and Russian bonds were slumping, but a heavier blow followed on March 15, when the EU told top credit agencies to stop rating Russian dept or risk losing their licenses to operate in the bloc.
“We were caught flat-footed, certainly we were not given any advanced warning,” one senior rating agency analyst said.
“Basically the question was, does this mean we can’t rate Russia any more?”
It turned out the answer was yes.
DEFAULT DEADLINE ONE
With so many hurdles being erected, expectations built that Russia would default on its first post-sanctions’ bond payments either on March 16, or a month later at the end of a 30-day “grace period.”
However, a special “waiver” in the U.S. sanctions granted by the Treasury’s Office of Foreign Assets Control allowed payments to go through.
UNINTENDED CONSEQUENCES
On April 8, a week before the EU ban on Russian ratings was due to come into force, S&P declared Russia in “selective default” after Moscow said it planned to make upcoming bond payments in roubles rather than dollars, their issue currency.
On May 3 though, shortly before the payment was due, the Kremlin U-turned and paid in dollars.
SHOCK TO THE SYSTEM
Days later, Russia had stumbled, though.
On May 11, sharp-eyed creditors spotted that Moscow had failed to add $1.9 million of extra interest that had built up on bonds that only got paid in their grace periods rather than on time.
They contacted the clearing house Euroclear and then bond market equivalent of an insurance payment arbiter - the Credit Derivative Determinations Committee here which ruled that a "credit event" had happened.
The sum was too small to trigger default clauses in all of Russia’s international bonds, but it did mean some investors expected to receive default insurance payments.
But when the U.S. Treasury clarified on its website that buying Russian bonds on the open, or ‘secondary’ market, was banned, that credit default swap (CDS) insurance process had to be halted as it was no longer clear what to do with the bonds involved.
“It is a bit like if your house burns down and the insurance company turns around and claims it was the wrong kind of fire,” said Joe Delvaux, emerging markets distressed debt portfolio manager at Europe’s largest fund manager Amundi.
“The reality is that these sanctions are a shock to the system.”
INTENDED CONSEQUENCES
The step that made Russia’s default unavoidable though was Washington’s May 24 decision to let the waiver that had allowed U.S. bondholders to receive Russia’s payments, expire.
A week later, the EU also sanctioned Russia’s domestic paying agent, its National Settlement Depository (NSD), which it had been using to make the payments.
Moscow has blamed the West for forcing an “artificial default”, with its finance minister Anton Siluanov calling the situation a “farce.”
However, veteran global policymakers involved in the process say the sanctions are unprecedented but fully justified.
“They were very significant actions that responded to the magnitude of the actions that Russia undertook,” Agustin Carstens, the head of the world’s central bank umbrella body, the Bank for International Settlements, said.
Additional reporting by John O’Donnell in Frankfurt, Francesco Guarascio in Brussels, Andrew MacAskill, Karin Strohecker and Vincent Flasseur in London and Gavin Jones in Milan; Editing by Tomasz Janowski
https://www.reuters.com/article/ukraine ... SL8N2YE3N4
Re: RUSSIA
REUTERS
"France working on contingency plans as energy crisis looms"
By Dominique Vidalon and Leigh Thomas
June 27, 2022
Summary
* Energy bosses urge users to lower use
* France aims to cut power consumption by 10% over two years
* Gas rationing "not the base case for now" -finmin source
PARIS, June 27 (Reuters) - France is working on contingency plans for cuts to Russian gas flows as top bosses at energy companies urge individuals and businesses to reduce power use.
France is less reliant than some of its neighbours on gas imports from Russia, which account for about 17% of its gas consumption.
But concerns about supply from Russia come as France grapples with already limited electricity generation due to unexpected maintenance at its aging nuclear reactors, prompting concern over winter shortages.
European Union leaders last week agreed to boost preparations for further cuts in Russian gas, accusing Moscow of "weaponising" energy via a supply squeeze which Germany warned could partly shut its industry.
French Finance Minister Bruno Le Maire said on Monday the government was working on energy emergency plans but has not yet had to put them into action.
"We will determine which companies are of the most strategic importance, namely those for whom we can allow gas to be cut off and those for whom we cannot allow any cuts," Le Maire told RMC Radio, without providing further detail.
"We are working on different scenarios, but for now this (rationing) is not the base case," a finance ministry source said.
In April, gas transport network operator GRTgaz said it had put in place measures that can be invoked to limit gas supply to customers in the event of shortages, and called on suppliers to fill underground storage ahead of next winter.
So-called load shedding is the deliberate shutdown of consumption to help cover supply deficits, usually determined through contracts with industry in the event of excess demand.
French gas users whose consumption exceeds 5 gigawatt hours (GWh) per year would be the first group impacted by load-shedding, the company had said.
These notably include large industrial sites in the refining, chemical and glass sectors as well as commercial malls and stadiums.
Last week, France said it would aim to fill its gas storage facilities by early autumn from 59% full now and that it will install an offshore terminal to receive liquefied natural gas (LNG) at the northern port of Le Havre in September 2023.
It also called for a 10% reduction in energy consumption over two years.
Le Maire on Monday said he backed an unusual call by the heads of France's top energy companies for individuals and businesses to limit power consumption immediately.
"We need to work collectively to reduce our consumption in order to regain room to manoeuvre," the chief executives of Engie, EDF and TotalEnergies said in an open letter published by weekly newspaper Journal du Dimanche.
The letter signed by Engie's Catherine MacGregor, EDF's Jean-Bernard Levy and TotalEnergies' Patrick Pouyanne cited sharp declines in Russian gas supply as well as limited electricity generation because of maintenance issues.
"The surge in energy prices that results from these difficulties threatens our social and political cohesion and weighs too heavily on the purchasing power of families."
"This is why we are launching this joint appeal" they wrote.
France on Sunday extended its mechanism for regulating gas prices to the end of the year.
The regulated tariff regime was originally set to end at the end of June.
Reporting by Tassilo Hummel; editing by Gareth Jones and Jason Neely
https://www.reuters.com/business/energy ... 022-06-27/
"France working on contingency plans as energy crisis looms"
By Dominique Vidalon and Leigh Thomas
June 27, 2022
Summary
* Energy bosses urge users to lower use
* France aims to cut power consumption by 10% over two years
* Gas rationing "not the base case for now" -finmin source
PARIS, June 27 (Reuters) - France is working on contingency plans for cuts to Russian gas flows as top bosses at energy companies urge individuals and businesses to reduce power use.
France is less reliant than some of its neighbours on gas imports from Russia, which account for about 17% of its gas consumption.
But concerns about supply from Russia come as France grapples with already limited electricity generation due to unexpected maintenance at its aging nuclear reactors, prompting concern over winter shortages.
European Union leaders last week agreed to boost preparations for further cuts in Russian gas, accusing Moscow of "weaponising" energy via a supply squeeze which Germany warned could partly shut its industry.
French Finance Minister Bruno Le Maire said on Monday the government was working on energy emergency plans but has not yet had to put them into action.
"We will determine which companies are of the most strategic importance, namely those for whom we can allow gas to be cut off and those for whom we cannot allow any cuts," Le Maire told RMC Radio, without providing further detail.
"We are working on different scenarios, but for now this (rationing) is not the base case," a finance ministry source said.
In April, gas transport network operator GRTgaz said it had put in place measures that can be invoked to limit gas supply to customers in the event of shortages, and called on suppliers to fill underground storage ahead of next winter.
So-called load shedding is the deliberate shutdown of consumption to help cover supply deficits, usually determined through contracts with industry in the event of excess demand.
French gas users whose consumption exceeds 5 gigawatt hours (GWh) per year would be the first group impacted by load-shedding, the company had said.
These notably include large industrial sites in the refining, chemical and glass sectors as well as commercial malls and stadiums.
Last week, France said it would aim to fill its gas storage facilities by early autumn from 59% full now and that it will install an offshore terminal to receive liquefied natural gas (LNG) at the northern port of Le Havre in September 2023.
It also called for a 10% reduction in energy consumption over two years.
Le Maire on Monday said he backed an unusual call by the heads of France's top energy companies for individuals and businesses to limit power consumption immediately.
"We need to work collectively to reduce our consumption in order to regain room to manoeuvre," the chief executives of Engie, EDF and TotalEnergies said in an open letter published by weekly newspaper Journal du Dimanche.
The letter signed by Engie's Catherine MacGregor, EDF's Jean-Bernard Levy and TotalEnergies' Patrick Pouyanne cited sharp declines in Russian gas supply as well as limited electricity generation because of maintenance issues.
"The surge in energy prices that results from these difficulties threatens our social and political cohesion and weighs too heavily on the purchasing power of families."
"This is why we are launching this joint appeal" they wrote.
France on Sunday extended its mechanism for regulating gas prices to the end of the year.
The regulated tariff regime was originally set to end at the end of June.
Reporting by Tassilo Hummel; editing by Gareth Jones and Jason Neely
https://www.reuters.com/business/energy ... 022-06-27/
Re: RUSSIA
REUTERS
"G7 to stand with Ukraine 'for as long as it takes'"
By Angelo Amante and John Irish
June 27, 2022
Summary
* G7 to work with other countries, private sector on oil price cap
* Emerging countries decline to criticise Russia over Ukraine
* Japan tries to cut zero-emission vehicles goal from G7 statement
SCHLOSS ELMAU, Germany, June 27 (Reuters) - The Group of Seven club of wealthy nations on Monday vowed to stand with Ukraine "for as long as it takes", promising to tighten the squeeze on Russia's finances with new sanctions that include a proposal to cap the price of Russian oil.
The announcement came after Ukraine's President Volodymyr Zelenskiy, addressing G7 leaders at their summit in the Bavarian Alps via a video link, asked for weapons and air defences to gain the upper hand in the war against Russia within months.
But efforts to rally the Global South to the Ukrainian cause were less successful, with five developing countries invited to partner with the rich country club signing up only to a mildly worded statement hailing democracy's "courageous defenders" without referring explicitly to Russia's invasion of Ukraine.
The G7 leaders' own statement aimed to signal that its members were ready to back Ukraine for the long haul, at a time when soaring inflation and energy shortages - fuelled by Russia's invasion - have tested the West's sanctions resolve.
"We will continue to provide financial, humanitarian, military and diplomatic support and stand with Ukraine for as long as it takes," the statement said.
After missiles rained down on Kyiv on Sunday, U.S. national security adviser Jake Sullivan said the United States was readying a new weapons package for Ukraine that included long-range air defences and ammunition.
In reference to Zelenskiy's address, Sullivan told reporters: "At the top of his mind was the set of missile strikes that took place in Kyiv and other cities across Ukraine and his desire to get additional air defence capabilities that could shoot down Russian missiles out of the sky."
The G7 countries said they were ready to provide security commitments in a post-war settlement while stressing, after Ukraine had earlier voiced misgivings, that it was up to Kyiv to decide a future peace deal with Russia.
The G7 countries said they had also pledged or were ready to grant up to $29.5 billion for Ukraine.
TAKING AIM AT PUTIN'S REVENUES
The White House said on Monday that Russia had defaulted on its foreign sovereign bonds for the first time in a century - an assertion Moscow rejected.
G7 nations, which generate nearly half the world's economic output, want to crank up pressure on Russia without stoking already soaring inflation that is causing strains at home and savaging the Global South.
The expanded sanctions would also target Russia's revenue stream from gold exports, Moscow's military production and officials installed by Moscow in areas of Ukraine occupied by Russian forces.
Imposing the oil price cap aims to hit Russian President Vladimir Putin's war chest while actually lowering energy prices.
"The dual objectives of G7 leaders have been to take direct aim at Putin's revenues, particularly through energy, but also to minimize the spillovers and the impact on the G7 economies and the rest of the world," a U.S. official said on the sidelines of the G7 summit.
Western sanctions have hit Russia's economy hard and the new measures are aimed at further depriving the Kremlin of oil revenues.
G7 countries would work with others - including India - to limit the revenues that Putin can continue to generate, the U.S. official said.
India has refrained from criticising Russia and provided a market for Russian oil, gas and coal as it sought to balance longstanding ties with Moscow and relations with the West.
While hosting the Indonesian president at the G7 summit, German Chancellor Olaf Scholz did not rule out boycotting the Group of Twenty summit in Indonesia in November if Putin attended.
India's Prime Minister Narendra Modi is one of the five leaders of guest nations joining the G7 for talks on climate change, energy, health, food security and gender equality on the second day of the summit.
"It is good, important and necessary that we talk to each other," Scholz said of the guest nations, which also included Argentina, Indonesia, Senegal and South Africa, hailing them as "democracies of the future."
MORE SANCTIONS
A U.S. official said news that Russia defaulted on its foreign sovereign bonds for the first time since the Bolshevik revolution in 1917 showed how effective Western sanctions had been.
The Kremlin, which has the funds to make payments thanks to rich energy revenues, swiftly rejected the U.S. statement, accusing the West of driving it into an artificial default.
The United States said it would also implement sanctions on hundreds of individuals and entities adding to the more than 1,000 already sanctioned, target companies in several countries, and impose tariffs on hundreds of Russia products.
The agencies involved would release details on Tuesday to minimize any flight risk, a second senior administration official said.
The Ukraine crisis has detracted attention from another crisis - that of climate change - originally set to dominate the summit.
Activists fear Western nations are watering down their climate ambitions as they scramble to find alternatives to Russian gas imports and rely more heavily on coal, a dirtier fossil fuel, instead.
Japan is also pushing to remove a target for zero-emission vehicles from a G7 communique expected this week, according to a proposed draft seen by Reuters.
Reporting by Andrea Shalal and Sarah Marsh, Angelo Amante, Phil Blenkinsop; Writing by Sarah Marsh and Matthias Williams; Editing by Thomas Escritt, Mark Heinrich and Alex Richardson
https://www.reuters.com/business/energy ... 022-06-27/
"G7 to stand with Ukraine 'for as long as it takes'"
By Angelo Amante and John Irish
June 27, 2022
Summary
* G7 to work with other countries, private sector on oil price cap
* Emerging countries decline to criticise Russia over Ukraine
* Japan tries to cut zero-emission vehicles goal from G7 statement
SCHLOSS ELMAU, Germany, June 27 (Reuters) - The Group of Seven club of wealthy nations on Monday vowed to stand with Ukraine "for as long as it takes", promising to tighten the squeeze on Russia's finances with new sanctions that include a proposal to cap the price of Russian oil.
The announcement came after Ukraine's President Volodymyr Zelenskiy, addressing G7 leaders at their summit in the Bavarian Alps via a video link, asked for weapons and air defences to gain the upper hand in the war against Russia within months.
But efforts to rally the Global South to the Ukrainian cause were less successful, with five developing countries invited to partner with the rich country club signing up only to a mildly worded statement hailing democracy's "courageous defenders" without referring explicitly to Russia's invasion of Ukraine.
The G7 leaders' own statement aimed to signal that its members were ready to back Ukraine for the long haul, at a time when soaring inflation and energy shortages - fuelled by Russia's invasion - have tested the West's sanctions resolve.
"We will continue to provide financial, humanitarian, military and diplomatic support and stand with Ukraine for as long as it takes," the statement said.
After missiles rained down on Kyiv on Sunday, U.S. national security adviser Jake Sullivan said the United States was readying a new weapons package for Ukraine that included long-range air defences and ammunition.
In reference to Zelenskiy's address, Sullivan told reporters: "At the top of his mind was the set of missile strikes that took place in Kyiv and other cities across Ukraine and his desire to get additional air defence capabilities that could shoot down Russian missiles out of the sky."
The G7 countries said they were ready to provide security commitments in a post-war settlement while stressing, after Ukraine had earlier voiced misgivings, that it was up to Kyiv to decide a future peace deal with Russia.
The G7 countries said they had also pledged or were ready to grant up to $29.5 billion for Ukraine.
TAKING AIM AT PUTIN'S REVENUES
The White House said on Monday that Russia had defaulted on its foreign sovereign bonds for the first time in a century - an assertion Moscow rejected.
G7 nations, which generate nearly half the world's economic output, want to crank up pressure on Russia without stoking already soaring inflation that is causing strains at home and savaging the Global South.
The expanded sanctions would also target Russia's revenue stream from gold exports, Moscow's military production and officials installed by Moscow in areas of Ukraine occupied by Russian forces.
Imposing the oil price cap aims to hit Russian President Vladimir Putin's war chest while actually lowering energy prices.
"The dual objectives of G7 leaders have been to take direct aim at Putin's revenues, particularly through energy, but also to minimize the spillovers and the impact on the G7 economies and the rest of the world," a U.S. official said on the sidelines of the G7 summit.
Western sanctions have hit Russia's economy hard and the new measures are aimed at further depriving the Kremlin of oil revenues.
G7 countries would work with others - including India - to limit the revenues that Putin can continue to generate, the U.S. official said.
India has refrained from criticising Russia and provided a market for Russian oil, gas and coal as it sought to balance longstanding ties with Moscow and relations with the West.
While hosting the Indonesian president at the G7 summit, German Chancellor Olaf Scholz did not rule out boycotting the Group of Twenty summit in Indonesia in November if Putin attended.
India's Prime Minister Narendra Modi is one of the five leaders of guest nations joining the G7 for talks on climate change, energy, health, food security and gender equality on the second day of the summit.
"It is good, important and necessary that we talk to each other," Scholz said of the guest nations, which also included Argentina, Indonesia, Senegal and South Africa, hailing them as "democracies of the future."
MORE SANCTIONS
A U.S. official said news that Russia defaulted on its foreign sovereign bonds for the first time since the Bolshevik revolution in 1917 showed how effective Western sanctions had been.
The Kremlin, which has the funds to make payments thanks to rich energy revenues, swiftly rejected the U.S. statement, accusing the West of driving it into an artificial default.
The United States said it would also implement sanctions on hundreds of individuals and entities adding to the more than 1,000 already sanctioned, target companies in several countries, and impose tariffs on hundreds of Russia products.
The agencies involved would release details on Tuesday to minimize any flight risk, a second senior administration official said.
The Ukraine crisis has detracted attention from another crisis - that of climate change - originally set to dominate the summit.
Activists fear Western nations are watering down their climate ambitions as they scramble to find alternatives to Russian gas imports and rely more heavily on coal, a dirtier fossil fuel, instead.
Japan is also pushing to remove a target for zero-emission vehicles from a G7 communique expected this week, according to a proposed draft seen by Reuters.
Reporting by Andrea Shalal and Sarah Marsh, Angelo Amante, Phil Blenkinsop; Writing by Sarah Marsh and Matthias Williams; Editing by Thomas Escritt, Mark Heinrich and Alex Richardson
https://www.reuters.com/business/energy ... 022-06-27/
Re: RUSSIA
REUTERS
"Macron tells Biden that UAE, Saudi can barely raise oil output"
Reuters
June 27, 2022
GARMISCH-PARTENKIRCHEN, Germany, June 27 (Reuters) - Two top OPEC oil producers, Saudi Arabia and the United Arab Emirates, can barely increase oil production, French President Emmanuel Macron on Monday said he had been told by the UAE's president.
Saudi Arabia and the UAE have been perceived as the only two countries in the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity to boost global deliveries that could reduce prices.
"I had a call with MbZ," Macron was heard telling U.S. President Joe Biden on the sidelines of the G7 summit, using shorthand for UAE leader Sheikh Mohammed bin Zayed al-Nahyan.
"He told me two things."
"I'm at a maximum, maximum (production capacity)."
"This is what he claims."
"And then he said (the) Saudis can increase by 150 (thousands barrels per day)."
"Maybe a little bit more, but they don't have huge capacities before six months' time," Macron said.
The UAE's top energy official confirmed Macron's statement to the country's state news agency.
"In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline," said Energy Minister Suhail bin Mohammed Al Mazrouei.
World oil prices have been steadily rising in recent months due to a shortage of supply and rebound in demand from the worst of the coronavirus epidemic.
Prices have risen further since Moscow invaded Ukraine in late February.
On Monday, benchmark crude rose after Reuters reported Macron's comments.
Brent oil prices rose 1.7% to above $115 per barrel as the West seeks ways to reduce Russian oil imports to punish Moscow.
Saudi Arabia is producing 10.5 million bpd and has a nameplate capacity of 12.0 million-12.5 million bpd, which in theory shall allow it to raise production by 2 million.
The UAE is producing some 3 million bpd, has capacity of 3.4 million and has been working on raising it to 4 million bpd.
Europe is looking for ways to replace as much as 2 million bpd of Russian crude and some 2 million bpd of refined products it had been importing from Moscow before the Ukraine war.
Reporting by Reuters TV; Writing by Dmitry Zhdannikov; Editing by Jan Harvey and Grant McCool
https://www.reuters.com/world/macron-te ... 022-06-27/
"Macron tells Biden that UAE, Saudi can barely raise oil output"
Reuters
June 27, 2022
GARMISCH-PARTENKIRCHEN, Germany, June 27 (Reuters) - Two top OPEC oil producers, Saudi Arabia and the United Arab Emirates, can barely increase oil production, French President Emmanuel Macron on Monday said he had been told by the UAE's president.
Saudi Arabia and the UAE have been perceived as the only two countries in the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity to boost global deliveries that could reduce prices.
"I had a call with MbZ," Macron was heard telling U.S. President Joe Biden on the sidelines of the G7 summit, using shorthand for UAE leader Sheikh Mohammed bin Zayed al-Nahyan.
"He told me two things."
"I'm at a maximum, maximum (production capacity)."
"This is what he claims."
"And then he said (the) Saudis can increase by 150 (thousands barrels per day)."
"Maybe a little bit more, but they don't have huge capacities before six months' time," Macron said.
The UAE's top energy official confirmed Macron's statement to the country's state news agency.
"In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline," said Energy Minister Suhail bin Mohammed Al Mazrouei.
World oil prices have been steadily rising in recent months due to a shortage of supply and rebound in demand from the worst of the coronavirus epidemic.
Prices have risen further since Moscow invaded Ukraine in late February.
On Monday, benchmark crude rose after Reuters reported Macron's comments.
Brent oil prices rose 1.7% to above $115 per barrel as the West seeks ways to reduce Russian oil imports to punish Moscow.
Saudi Arabia is producing 10.5 million bpd and has a nameplate capacity of 12.0 million-12.5 million bpd, which in theory shall allow it to raise production by 2 million.
The UAE is producing some 3 million bpd, has capacity of 3.4 million and has been working on raising it to 4 million bpd.
Europe is looking for ways to replace as much as 2 million bpd of Russian crude and some 2 million bpd of refined products it had been importing from Moscow before the Ukraine war.
Reporting by Reuters TV; Writing by Dmitry Zhdannikov; Editing by Jan Harvey and Grant McCool
https://www.reuters.com/world/macron-te ... 022-06-27/
Re: RUSSIA
REUTERS
"Explainer: Faced with Russia default, bondholders brace for legal maze"
By Jorgelina Do Rosario and Rodrigo Campos
June 27, 2022
LONDON/NEW YORK, June 27 (Reuters) - Holders of Russia's external debt, which Washington says is already in default, face unusual circumstances: Moscow has the funds and says it wants to pay but is unable to do so because of sanctions imposed after it invaded Ukraine.
The context adds to the complexity: the bonds were issued with unusual terms, the issuer is waging a war that shows little sign of abating, and it has been cut off from the global financial system.
Below are possible scenarios for investors holding some of the nearly $40 billion outstanding in Russian sovereign foreign currency bonds.
ACCELERATION
Creditors can demand full payment, known as acceleration, if a debtor breaks the bond contract.
But there are rules for how this can be triggered.
A group representing at least 25% of outstanding bonds is necessary to declare an event of default and accelerate the payments, according to the terms of Russia's 2026 and 2036 bonds.
Such a declaration allows bondholders to demand the payment of all outstanding debt, no matter the maturity.
This scenario could be reversed by a vote from "at least 50% in aggregate principal amount of the outstanding bonds," as that is the necessary percentage to waive an event of default.
"The Russian Federation shall give notice thereof to the Bondholders (with a copy to the Fiscal Agent), whereupon the relevant declaration shall be withdrawn and shall have no further effect," according to the terms.
It is unclear what percentage of the two bonds in question - but also of Russia's bonds more widely - are held by overseas investors and how much by domestic ones.
LAWSUIT
Suing Russia over a sovereign default does not look straightforward.
Bond terms are unusual and at times vague, especially for those issued after Russia got hit over its 2014 annexation of Crimea and the 2018 poisoning of a spy in Britain.
For example, bonds are governed by English law but many do not specify the jurisdiction where disputes should be settled.
This could allow Russia to "go to a court in Moscow while creditors will seek to sue in London or New York," according to Mitu Gulati, a law professor at the University of Virginia and expert on debt restructurings.
Tatiana Orlova, lead economist at Oxford Economics, said investors have ample time to weigh their options.
"It is possible that some bondholders will delay filing claims against the Russian government as the bond documents set a three-year period from the payment date at the end of which such claims become void," she said.
Dennis Hranitzky, head of sovereign litigation at law firm Quinn Emanuel, said while there were indications some holders want to be "first to the court house," he expected most bondholders to "be deliberative."
Hranitzky, who has been advising creditors in many sovereign debt restructurings including Argentina, said any lawsuit was likely to drag on.
"It will all play out in slow motion – nothing is really going to happen until the end of hostilities."
ARBITRATION
Investors from jurisdictions with bilateral investment treaties with Russia could try arbitration against Moscow to seek monetary damages and other relief.
Russia has dozens of such treaties, including with most of the European Union, the United Kingdom and Canada.
There have been 27 such investment disputes involving Russia since 1996: 10 are pending, one was discontinued, one settled, 11 were decided against Russia and four in its favor, according to data from the United Nations Conference on Trade and Development.
WAIT & SEE
One of the options for overseas creditors is to just wait - for now at least.
Many funds have already divested from Russia due to a combination of sanctions and pressure from clients following the Feb. 24 invasion.
Even those which still hold securities had to write them down.
Either way, the damage is arguably already done.
A number of fund managers might decide to simply hold onto their bonds, for now.
"They are zero weight in the benchmark, they are priced at very low prices and obviously the sanctions on secondary market trading of Russian bonds will push them even lower," said Carl Ross, partner and sovereign credit analyst at GMO, which holds Russian debt.
"As long as Putin is in power, there is likely no expectation of recovery - but at some point, the claim survives."
Reporting by Jorgelina do Rosario in London and Rodrigo Campos in New York; additional reporting by Karin Strohecker; Editing by Tomasz Janowski
https://www.reuters.com/markets/europe/ ... 022-06-27/
"Explainer: Faced with Russia default, bondholders brace for legal maze"
By Jorgelina Do Rosario and Rodrigo Campos
June 27, 2022
LONDON/NEW YORK, June 27 (Reuters) - Holders of Russia's external debt, which Washington says is already in default, face unusual circumstances: Moscow has the funds and says it wants to pay but is unable to do so because of sanctions imposed after it invaded Ukraine.
The context adds to the complexity: the bonds were issued with unusual terms, the issuer is waging a war that shows little sign of abating, and it has been cut off from the global financial system.
Below are possible scenarios for investors holding some of the nearly $40 billion outstanding in Russian sovereign foreign currency bonds.
ACCELERATION
Creditors can demand full payment, known as acceleration, if a debtor breaks the bond contract.
But there are rules for how this can be triggered.
A group representing at least 25% of outstanding bonds is necessary to declare an event of default and accelerate the payments, according to the terms of Russia's 2026 and 2036 bonds.
Such a declaration allows bondholders to demand the payment of all outstanding debt, no matter the maturity.
This scenario could be reversed by a vote from "at least 50% in aggregate principal amount of the outstanding bonds," as that is the necessary percentage to waive an event of default.
"The Russian Federation shall give notice thereof to the Bondholders (with a copy to the Fiscal Agent), whereupon the relevant declaration shall be withdrawn and shall have no further effect," according to the terms.
It is unclear what percentage of the two bonds in question - but also of Russia's bonds more widely - are held by overseas investors and how much by domestic ones.
LAWSUIT
Suing Russia over a sovereign default does not look straightforward.
Bond terms are unusual and at times vague, especially for those issued after Russia got hit over its 2014 annexation of Crimea and the 2018 poisoning of a spy in Britain.
For example, bonds are governed by English law but many do not specify the jurisdiction where disputes should be settled.
This could allow Russia to "go to a court in Moscow while creditors will seek to sue in London or New York," according to Mitu Gulati, a law professor at the University of Virginia and expert on debt restructurings.
Tatiana Orlova, lead economist at Oxford Economics, said investors have ample time to weigh their options.
"It is possible that some bondholders will delay filing claims against the Russian government as the bond documents set a three-year period from the payment date at the end of which such claims become void," she said.
Dennis Hranitzky, head of sovereign litigation at law firm Quinn Emanuel, said while there were indications some holders want to be "first to the court house," he expected most bondholders to "be deliberative."
Hranitzky, who has been advising creditors in many sovereign debt restructurings including Argentina, said any lawsuit was likely to drag on.
"It will all play out in slow motion – nothing is really going to happen until the end of hostilities."
ARBITRATION
Investors from jurisdictions with bilateral investment treaties with Russia could try arbitration against Moscow to seek monetary damages and other relief.
Russia has dozens of such treaties, including with most of the European Union, the United Kingdom and Canada.
There have been 27 such investment disputes involving Russia since 1996: 10 are pending, one was discontinued, one settled, 11 were decided against Russia and four in its favor, according to data from the United Nations Conference on Trade and Development.
WAIT & SEE
One of the options for overseas creditors is to just wait - for now at least.
Many funds have already divested from Russia due to a combination of sanctions and pressure from clients following the Feb. 24 invasion.
Even those which still hold securities had to write them down.
Either way, the damage is arguably already done.
A number of fund managers might decide to simply hold onto their bonds, for now.
"They are zero weight in the benchmark, they are priced at very low prices and obviously the sanctions on secondary market trading of Russian bonds will push them even lower," said Carl Ross, partner and sovereign credit analyst at GMO, which holds Russian debt.
"As long as Putin is in power, there is likely no expectation of recovery - but at some point, the claim survives."
Reporting by Jorgelina do Rosario in London and Rodrigo Campos in New York; additional reporting by Karin Strohecker; Editing by Tomasz Janowski
https://www.reuters.com/markets/europe/ ... 022-06-27/
Re: RUSSIA
REUTERS
"Russia, rejecting default, tells investors to go to western financial agents"
Reuters
June 27, 2022
Summary
* White House says Russia has defaulted on its external debt
* Kremlin, finance ministry deny default, say Euroclear blocked payments
* Russia to allow bondholders to convert roubles to forex and transfer abroad, bypassing National Settlement Depository
* Bondholders should open a Russian bank account and refuse any claims on Russia
June 27 (Reuters) - Russia rejected claims on Monday that is had defaulted on its external debt for the first time in more than a century, telling investors to go to Western financial agents for the cash which was sent but bondholders did not receive.
The White House said on Monday that Russia has defaulted on its international bonds for the first time since the Bolshevik revolution, as sweeping sanctions have effectively cut the country off from the global financial system.
Until last week, Russia kept on paying on its Eurobonds in foreign currency as per issue conditions yet its dollar and euro coupon transfers made in May, ahead of a key U.S. waiver allowing for such transactions expired, did not reach investors.
"Statements of a default are absolutely unjustified," Kremlin spokesperson Dmitry Peskov told a call with reporters on Monday, pointing to the May forex coupon payment.
"The fact that Euroclear withheld this money and did not bring it to the recipients is not our problem."
"There are absolutely no grounds to call such situation a default."
Euroclear did not immediately respond to a request for comment.
On Monday, the finance ministry said that 'actions of foreign financial intermediaries are beyond of the Russian finance ministry's control,' asking foreign bondholders to speak directly to those withholding the payments.
"The non-receipt of money by investors did not occur because of lack of payment but due to the third party actions and which is not directly spelled out as a default situation by issue documentation," the ministry added.
As the U.S. waiver expired and the European Union sanctioned the National Settlement Depository (NSD), the Russian version of Euroclear and Clearstream western clearing houses, last week Moscow paid its next coupons due in forex in roubles.
President Vladimir Putin ordered last week that debt obligations would be considered fulfilled once a rouble payment equal to the forex amount due was made.
Bondholders would need to open an account at a Russian bank to receive the payment.
Moscow would not block the payment's conversion into forex and its transfer abroad but investors would need to say in writing they don't have claims against Russia, the ministry has said.
The banks are yet to be announced.
'FINANCIAL NUCLEAR BOMB'
The Group of Seven major Western powers banned transactions with Russia's central bank and froze its assets held in their jurisdictions, worth around $300 billion, after Russia launched what it called special military operation in Ukraine in February.
Some western politicians have called to seize the reserves frozen to rebuild Ukraine - the idea two high-ranked Russian financial sources said they believed was behind the announcement of default and which Moscow considers artificial.
"By announcing a default, they can claim that sanctions work."
"Economically, financially assets could be confiscated legally," one of the two sources said.
Peskov reiterated on Monday that reserves were blocked 'unlawfully' and any attempts to use them would 'amount to outright theft.'
"I believe that a financial nuclear bomb was used against us, no country in the history of mankind has experienced such sanctions pressure as Russia is now," Alexei Moiseev, Russian deputy finance minister, said last week.
Reporting by Reuters; Editing by Frank Jack Daniel
https://www.reuters.com/markets/commodi ... 022-06-27/
"Russia, rejecting default, tells investors to go to western financial agents"
Reuters
June 27, 2022
Summary
* White House says Russia has defaulted on its external debt
* Kremlin, finance ministry deny default, say Euroclear blocked payments
* Russia to allow bondholders to convert roubles to forex and transfer abroad, bypassing National Settlement Depository
* Bondholders should open a Russian bank account and refuse any claims on Russia
June 27 (Reuters) - Russia rejected claims on Monday that is had defaulted on its external debt for the first time in more than a century, telling investors to go to Western financial agents for the cash which was sent but bondholders did not receive.
The White House said on Monday that Russia has defaulted on its international bonds for the first time since the Bolshevik revolution, as sweeping sanctions have effectively cut the country off from the global financial system.
Until last week, Russia kept on paying on its Eurobonds in foreign currency as per issue conditions yet its dollar and euro coupon transfers made in May, ahead of a key U.S. waiver allowing for such transactions expired, did not reach investors.
"Statements of a default are absolutely unjustified," Kremlin spokesperson Dmitry Peskov told a call with reporters on Monday, pointing to the May forex coupon payment.
"The fact that Euroclear withheld this money and did not bring it to the recipients is not our problem."
"There are absolutely no grounds to call such situation a default."
Euroclear did not immediately respond to a request for comment.
On Monday, the finance ministry said that 'actions of foreign financial intermediaries are beyond of the Russian finance ministry's control,' asking foreign bondholders to speak directly to those withholding the payments.
"The non-receipt of money by investors did not occur because of lack of payment but due to the third party actions and which is not directly spelled out as a default situation by issue documentation," the ministry added.
As the U.S. waiver expired and the European Union sanctioned the National Settlement Depository (NSD), the Russian version of Euroclear and Clearstream western clearing houses, last week Moscow paid its next coupons due in forex in roubles.
President Vladimir Putin ordered last week that debt obligations would be considered fulfilled once a rouble payment equal to the forex amount due was made.
Bondholders would need to open an account at a Russian bank to receive the payment.
Moscow would not block the payment's conversion into forex and its transfer abroad but investors would need to say in writing they don't have claims against Russia, the ministry has said.
The banks are yet to be announced.
'FINANCIAL NUCLEAR BOMB'
The Group of Seven major Western powers banned transactions with Russia's central bank and froze its assets held in their jurisdictions, worth around $300 billion, after Russia launched what it called special military operation in Ukraine in February.
Some western politicians have called to seize the reserves frozen to rebuild Ukraine - the idea two high-ranked Russian financial sources said they believed was behind the announcement of default and which Moscow considers artificial.
"By announcing a default, they can claim that sanctions work."
"Economically, financially assets could be confiscated legally," one of the two sources said.
Peskov reiterated on Monday that reserves were blocked 'unlawfully' and any attempts to use them would 'amount to outright theft.'
"I believe that a financial nuclear bomb was used against us, no country in the history of mankind has experienced such sanctions pressure as Russia is now," Alexei Moiseev, Russian deputy finance minister, said last week.
Reporting by Reuters; Editing by Frank Jack Daniel
https://www.reuters.com/markets/commodi ... 022-06-27/
Re: RUSSIA
REUTERS
"Rouble firms past 52 against dollar for first time since May 2015"
Reuters
June 28, 2022
MOSCOW, June 28 (Reuters) - The rouble rallied past 52 against the dollar to a more than a seven-year high on Tuesday as capital controls and month-end taxes offset the negative impact of Western statements that Russia has defaulted on its international bonds.
The rouble became the world's best-performing currency this year, boosted by emergency measures that authorities have taken to shield Russia's financial system from western sanctions after Moscow sent tens of thousands of troops into Ukraine.
The rouble hit 50.6125 against the dollar in Moscow trade for the first time since late May 2015, and jumped to 54.40 against the euro, a level last seen in April 2015.
As of 1523 GMT, the rouble gained nearly 3% to 51.88 against the greenback and was at 54.71 against the euro, gaining more than 2.5% on the day .
The rouble is much stronger now than it was before Russia started what it calls a "special military operation" in Ukraine on Feb. 24.
Back then the rouble traded near 80 against the dollar and 90 against the euro as it was in free-float mode, hammered by fears of sanctions and had no support from capital controls.
Now demand for foreign currency in Russia remains below supply volumes from export-focused companies that need to convert their dollar and euro revenue to pay month-end taxes.
With restrictions on forex withdrawal from banks' accounts for individuals, capital restrictions have helped the rouble shrug off Western statements that Russia has defaulted on its international bonds for the first time in more than a century.
But Kremlin, which has money to make payments from oil and gas revenue, has rejected the claims and accused the West of driving it into an artificial default.
The declared default will have no substantial impact on Russian securities as Eurobonds have long priced in the default, while the external debt market is shut for Russia in any case, said Alexander Afonin, head of debt research at Sinara investment bank.
The rouble's upside could be limited given growing concerns about the impact of the strong rouble on Russia's revenues from selling commodities abroad for foreign currency.
Market players "see the current levels as attractive for purchasing hard currency, especially in light of the recent comments from Russian officials indicating that the rouble has become too strong," Sberbank CIB said in a note.
On the stock market, the dollar-denominated RTS index rose 2.5% to 1,464.1 points.
The rouble-based MOEX Russian index was 0.3% lower at 2,409.1 points.
Reporting by Reuters; editing by Barbara Lewis and Shinjini Ganguli
https://www.reuters.com/markets/europe/ ... 022-06-28/
"Rouble firms past 52 against dollar for first time since May 2015"
Reuters
June 28, 2022
MOSCOW, June 28 (Reuters) - The rouble rallied past 52 against the dollar to a more than a seven-year high on Tuesday as capital controls and month-end taxes offset the negative impact of Western statements that Russia has defaulted on its international bonds.
The rouble became the world's best-performing currency this year, boosted by emergency measures that authorities have taken to shield Russia's financial system from western sanctions after Moscow sent tens of thousands of troops into Ukraine.
The rouble hit 50.6125 against the dollar in Moscow trade for the first time since late May 2015, and jumped to 54.40 against the euro, a level last seen in April 2015.
As of 1523 GMT, the rouble gained nearly 3% to 51.88 against the greenback and was at 54.71 against the euro, gaining more than 2.5% on the day .
The rouble is much stronger now than it was before Russia started what it calls a "special military operation" in Ukraine on Feb. 24.
Back then the rouble traded near 80 against the dollar and 90 against the euro as it was in free-float mode, hammered by fears of sanctions and had no support from capital controls.
Now demand for foreign currency in Russia remains below supply volumes from export-focused companies that need to convert their dollar and euro revenue to pay month-end taxes.
With restrictions on forex withdrawal from banks' accounts for individuals, capital restrictions have helped the rouble shrug off Western statements that Russia has defaulted on its international bonds for the first time in more than a century.
But Kremlin, which has money to make payments from oil and gas revenue, has rejected the claims and accused the West of driving it into an artificial default.
The declared default will have no substantial impact on Russian securities as Eurobonds have long priced in the default, while the external debt market is shut for Russia in any case, said Alexander Afonin, head of debt research at Sinara investment bank.
The rouble's upside could be limited given growing concerns about the impact of the strong rouble on Russia's revenues from selling commodities abroad for foreign currency.
Market players "see the current levels as attractive for purchasing hard currency, especially in light of the recent comments from Russian officials indicating that the rouble has become too strong," Sberbank CIB said in a note.
On the stock market, the dollar-denominated RTS index rose 2.5% to 1,464.1 points.
The rouble-based MOEX Russian index was 0.3% lower at 2,409.1 points.
Reporting by Reuters; editing by Barbara Lewis and Shinjini Ganguli
https://www.reuters.com/markets/europe/ ... 022-06-28/