Russian Railways ruled in default after missing bond payment

Russian Railways, Russia’s fully state-owned vertically integrated railway company, both managing infrastructure and operating freight and passenger train services, has failed to pay a bond coupon due on March 14 and has been subsequently ruled in default.

The International Swaps and Derivatives Association (ISDA) announced today that “a Failure to Pay Credit Event occurred in respect of [Russian Railways],” which effectively puts the company in default over the payment.

Ụgbọ okporo ígwè Russia claims it tried to pay the bond coupon, but the payment did not reach investors by the end of a 10-day grace period due to “legal and regulatory compliance obligations within the correspondent banking network.” This refers to sanctions placed on Russia following Russian aggression in Ukraine. 

The ISDA’s decision comes amid speculation over whether Russia itself will default on two coupons on sovereign bonds, which it ‘paid’ in rubles last week.

Analysts say that Russia’s creditors may not accept ruble payments, which would put the country in default on its external debt for the first time in over a century.

The Russian Federation is the founder and sole shareholder of JSC Russian Railways. On behalf of its shareholders the powers are exercised by the Government of the Russian Federation. It approves the president of the company, forms the board of directors annually and approves the annual reports.

An IPO for the company was considered in 2012, but it was pushed back to after 2020.

The Chairman of the Board of Directors of JSC Russian Railways is Oleg Belozerov. Before him, the position was occupied by Kirill Androsov from September 2011 till June 2015., and previously by Alexander Zhukov – from 20 July 2004 to September 2011 and Viktor Khristenko – from 16 October 2003 – 20 July 2004.

Gennady Fadeev was President of JSC Russian Railways from 23 September 2003 – 14 June 2005. He was succeeded by Vladimir Yakunin – from 14 June 2005 to 20 August 2015. Oleg Belozyorov has been president of the company since 20 August 2015.