‘Minor’ $1.9 Million Failed Bond Interest Payment Triggers Russian “Failure-To-Pay” Event

In what seems a major action over what many outside observers may see as but a relatively minor technical issue, Russia’s failure to include less than $2 million interest on a late bond payment made at the start of last month has triggered a “failure-to-pay” event, the EMEA Credit Derivatives Determinations Committee has ruled. It has brought the country a significant step closer to a dreaded possible first major external debt default in over a century.

Russia failed to add the precisely $1.9 million in additional interest accrued on credit-default swaps. The ruling came after inquiry from overseas holders of the Russian sovereign bond in question, allowing them to seek payout on the default insurance on as much as $3.2 billion of debt (an amount likely determined later at auction)…