The EMEA Credit Derivatives Determinations Committee, made up of international investment banks, announced that its 14 members decided that the railway operator, RZD OAO, had failed to make interest payments on Swiss franc loan participation notes that fell due on March 28.
The notes, due in 2026, were issued by the company's financing vehicle RZD Capital PLC to finance a 250 million Swiss francs ($268 million) loan to the state railway operator. The European Union and the U.K. government imposed sanctions on the company in February.
Representatives from JPMorgan, Deutsche Bank and Credit Suisse were among the committee members to vote yes on April 8 on whether a "failure to pay" credit event had occurred.
Judgments by determination committees can trigger derivatives contracts insuring a borrower's debt against default, providing financial protection to bondholders.
Ireland-based RZD Capital said it had attempted to make the interest payments on March 14 as they were due, but this was unsuccessful due to legal and regulatory roadblocks. It said it would "continue to liaise with the borrower to obtain more information" about the receipt of the payment.
Fitch withdrew RZD Capital's rating at the beginning of April, citing its duty to comply with EU sanctions and suspending all of its commercial activity in the country.
The vote comes after one major Russian bank suspended interest payments earlier this month on dollar eurobonds worth $1.2 billion due to Western sanctions. The U.K. government also announced it would impose new sanctions on Russia, including on President Vladimir Putin's two daughters, as well as several more oligarchs and lenders.
Sanctions have also restricted the Russian government's ability to make bond payments after it was forced to pay $650 million on foreign dollar bonds in rubles, prompting speculation that the government was at risk of default.
--Additional reporting by Richard Crump. Editing by Joe Millis.
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