Severstal PJSC has become the first Russian company to run out of time to pay interest on foreign-currency debt since the war in Ukraine began after Citigroup Inc. blocked the transaction. It’s now at risk of creditors calling a default.
Although flush with cash, the steelmaker was unable to settle a $12.6 million dollar-bond coupon within a five-business day grace period that ended on Wednesday. Severstal said it’s keen to pay, but Citigroup, acting as correspondent bank of the unit issuing the debt, is blocking the payment. A person familiar with the matter said Citigroup asked the company to get permission from the U.S. Office of Foreign Assets Control before it could remit the cash. But neither the firm nor its controlling shareholder are sanctioned by the U.S.