Russian sanctions-linked firms run into hurdles with debt payments

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Debt obligations from Russian companies linked to sanctioned billionaires were keeping investors on tenterhooks on Tuesday, as coupon payments to foreign holders of the securities ran into hurdles due to Western sanctions triggered by Moscow’s invasion of Ukraine.

Russian steel producer Severstal, whose main shareholder, Alexey Mordashov, was sanctioned by the European Union on Feb. 28, was having trouble paying the holders of its debt, a source close to the company said.

Evraz, the Russian steelmaker whose biggest shareholder is sanctioned Russian Roman Abramovich, said on Tuesday the coupon payment due March 21 was settled with the paying agent after it was temporarily blocked by a Western correspondent bank.

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FertilisercompanyEuroChem has also had problems making a coupon payment that was due on March 14 after being blocked by the paying agent, Bloomberg reported last week. The company announced on March 16 that Vladimir Rashevskiy has resigned as chief executive officer and from the board of directors effective March 15 after he had been sanctioned by the EU.

The hurdles faced by these firms show how punishing Western sanctions imposed following Russia’s invasion are having broad impact, as banks turn cautious to avoid violating the rules.

Russia, which calls its attack on Ukraine a “special military operation,” has also had its sovereign debt payments come under a microscope from international investors. – Reuters

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