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Investors called for limiting government loans to Minsk due to non-payments on bonds

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Russian investors called on the country’s authorities to limit Belarus’s issuance of interstate loans and access to the Russian capital market due to non-payments on Eurobonds. About it reported RBC with reference to a letter to Deputy Minister of Economic Development Dmitry Volvach.

The letter was written by investor Alexander Marchenkov on behalf of the initiative group of owners of Belarusian Eurobonds worth more than $200 million. He noted that the group includes 200 individuals and 30 organizations. The author called on the deputy minister to “take measures to ensure that Belarus fulfills its obligations to all Russian investors as quickly as possible.” The obligations include payments on the country’s government securities, as specified in the letter.

The author of the appeal believes that the Ministry of Finance of Belarus needs to declare borrowers unscrupulous in the near future and limit the department’s access to the Russian capital market. Marchenkov also called on the Russian Ministry of Economic Development to consider options for limiting interstate lending to the former Soviet republic until the country repays its debts to Russian investors.

The author also sent a copy of the letter to the Bank of Russia, as well as to the ministries of finance of Russia and Belarus. The Central Bank noted that the issue of fulfilling obligations to Russian investors “is in the field of view of the heads of financial market regulators of the Russian Federation and the Republic of Belarus.”

According to RBC, an initiative group led by Marchenkov plans to file a claim with the London Court of International Arbitration against Belarus over non-payments on government securities.

Earlier, Marchenkov initiated a lawsuit in the Moscow City Court from Russian investors against the Ministry of Finance of Belarus due to non-payments on Eurobonds worth $300,000. The court discontinued consideration of the case and explained its decision by its lack of jurisdiction of Russian courts.

Belarus has stopped payments (coupons and redemptions) to Russian investors on Eurobonds from July 2022. This is due to Citibank’s refusal to service Belarusian government securities – the credit institution decided not to make payments on them anymore.

First, the republic offered investors to receive payments in Belarusian rubles through the Belarusian infrastructure to accounts in a local bank. The local Ministry of Finance carried out several tranches using this mechanism, but Russian investors who opened accounts in Belarusian banks did not receive payments or received only part of them.

After this, the country introduced a new payment mechanism. Now they had to pass in Belarusian rubles through foreign depositories that had entered into the necessary agreements with the Ministry of Finance of Belarus. Such a step would allow receiving payments only to those investors who bought Eurobonds before the decision to refuse servicing Belarusian government securities by Citibank came into force on September 6, 2022. The remaining investors were offered to exchange Eurobonds for domestic bonds or buy them back for 30% of the nominal value.

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