State-owned Russian Railways was declared in default of a bond obligation on Monday, setting the stage for credit insurance payouts on a Russian corporate borrower for the first time since the war in Ukraine began as sanctions impede payments to foreign creditors, WSJ Pro Bankruptcy reported. Paying agent UBS AG didn’t receive payment by the end of a grace period last month on a Swiss franc-denominated bond, constituting a failure-to-pay credit event, according to the EMEA Credit Derivatives Determination Committee, a panel of banks and investment firms overseeing credit-default swap contracts. UBS said last month that Russian Railways claimed to have attempted payment on the 250 million Swiss franc bond, equivalent to $268 million, but that no funds were received, due to what the Russian company understands to be “legal and regulatory compliance obligations within the correspondent banking network.” The U.S. and EU have imposed sanctions on Russian Railways that limit it from conducting transactions and obtaining financing. The White House said in February that it was including Russian Railways on a list of the 13 most critical Russian enterprises for sanctions that prevent them from raising money from the U.S. market. Russian companies, as well as the Russian government, have been facing difficulty in servicing their debt, particularly debt owned by foreign investors, following the implementation of sanctions in response to the country’s invasion of Ukraine.
