Fitch Declares Default In Belarus

The rating downgrade relates to external debt obligations.

Fitch Ratings has downgraded Belarus' long-term foreign currency issuer default rating from C to RD (Restricted Default).

Fitch Ratings informs about this.

It is noted that at the end of the 14-day grace period on July 13, 2022, to pay the coupon on the Eurobond 2027, Fitch downgraded Belarus to "restricted default" from C.

Reportedly, on June 29 the Ministry of Finance, the Council of Ministers and the National Bank of Belarus jointly announced that payments in US dollars on the Eurobonds will be transferred in Belarusian rubles in return to an account at Belarusbank, which the payment agent will have access to. Payment in domestic currency contradicts the bond documentation, which does not allow for settlements in alternative currencies.

Consequently, it is noted that the payment was not made under the initial terms and was not made before the end of the grace period.

The downgrade only applies to long-term external debt. Belarus' long-term local currency rating remains at CCC, as the government continued to service its debt in local currency, and the agency does not consider the risk of default on this debt to have changed substantially since the preliminary review on July 7, 2022.

We remind you that Russia found itself in a state of default at the end of June. Formally, the default occurred in Russia on June 26, when the 30-day grace period for the payment of $100 million in interest on the Eurobonds expired. Before that, Russia had struggled to make payments on the $40bn in bonds since its invasion into Ukraine on February 24.