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Russia’s New Bond Rules Split Creditors Based on Sanctions

  • Investors from ‘hostile’ countries will only be paid in rubles
  • Default question remains amid sanctions, capital controls
Vladimir Putin
Vladimir Putin

Source: AFP/Getty Images

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Vladimir Putin introduced new rules for foreign creditors that will set debt payments depending on whether or not investors are based in a country that’s sanctioned Russia, dividing bondholders into two distinct categories.

Authorities said at the weekend that Russia and Russian companies will be allowed to pay creditors from “countries that engage in hostile activities” in rubles, even on securities denominated in other currencies. But they also said creditors in countries that haven’t imposed sanctions may be able to receive the payment in foreign currency with special permission.