Peskov announced the plans of the West to push Russia to an artificial default

With a question about alternative settlement options for Eurobonds, the representative of the President advised to contact the Ministry of Finance Dmitry Peskov

With sanctions against the National Settlement Depository (NSD), the European Union is pushing RUSSIA towards an "artificial default," Presidential Press Secretary Dmitry Peskov said, RBC correspondent reports.

NSD is the central depository on the Russian stock market, it provides securities servicing and clearing services. The depositary is almost wholly owned by the Moscow Exchange. After the US decision to ban settlements on Russia's external debt, Citibank refused to act as a paying agent for its DOLLAR issues, and the Ministry of Finance transferred them to NSD. The agency expected to fulfill obligations on such issues in rubles with subsequent conversion into foreign currency for holders through NSD.

The question of possible other methods of payments on Eurobonds was forwarded by the Kremlin representative to the Ministry of Finance.

NSD was included in the sixth EU sanctions package: the European Commission indicated that the depository “plays a significant role in the functioning of the Russian financial system and its links with the international financial system, thus directly or indirectly assisting the Russian government in its activities, policies and resources.”

What sanctions against NSD mean for payments on public debt and foreign shares Finance

NSD recognized the situation in connection with the sanctions as an emergency and suspended banking operations in euros.

After the US government banned Russia from servicing foreign debt in April, the Finance Ministry announced that it would fulfill its obligations in rubles with subsequent conversion into foreign currency. Anton Prokudin, chief macroeconomist at Ingosstrakh-Investments, explained that EU sanctions deprive Russia of the possibility of ruble settlements, at least for European investors, because foreigners will not be able to withdraw the funds transferred to NSD.

The DIRECTOR of the French branch of the British consulting company Aperio Intelligence, George Voloshin, said that "it seems that it will not be possible to avoid a default." Meanwhile, Vladislav Kholodkov, senior lawyer at RCT, noted that there are still formal chances to avoid default: the EU has established exceptions for the fulfillment of obligations that appeared before the depositary fell under sanctions, provided that the funds are not directly or indirectly received by the person under sanctions. EU countries may approve payments from NSD under such contracts or obligations. At the same time, the onset of a technical default in the current conditions is a formality, the expert noted.

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