Russian diamond miner ‘Alrosa’ to default on Eurobond payment An employee inspects rough diamonds in Alrosa Diamond Sorting Center in the town of Mirny on July 1, 2019. (Photo by ALEXANDER NEMENOV/AFP via Getty Images)
RUSSIA‘s state-owned diamond miner Alrosa said that it cannot make a payment on a eurobond after Washington imposed blocking sanctions, the Interfax news agency reported.
The company said that for “technical reasons” it cannot pay a $11.6 million coupon on a dollar-denominated eurobond, the agency reported.
The US Treasury on Thursday (7) announced blocking sanctions against Russia’s partly state-owned Alrosa, one of the world’s largest diamond mining companies. The company was already under UK sanctions.
Washington cited Alrosa’s role providing “an additional source of support and revenue” for the Russian government while it conducts a deadly military operation in Ukraine.
The company had earlier been targeted by Britain, which additionally imposed personal sanctions on its president, Sergei Ivanov, whose father has the same name and was formerly Russian president Vladimir Putin‘s chief of staff.
Alrosa said the latest measures made it “technically impossible” to correctly settle its debt obligations, while it has the financial resources to do so.
Alrosa is based in Yakutia, Sakha Republic, in eastern Siberia. In March it announced its net profit for 2021 had tripled year on year to $1.1 billion.
The bond payment was due on Saturday (9) but Interfax said scheduled payments that fall on weekends are usually carried over to the next working day.
Russia is the largest global producer of natural diamonds and Alrosa makes up 93 per cent of its production, according to the company’s website.
Alrosa’s shares on the Moscow Stock Exchange fell 13 per cent last Friday after the US sanctions announcement.
The company had said in a press release on April 5, ahead of the additional US sanction announcement, that it was “taking all possible steps and measures” to make the next coupon payment.
Russia was declared in “selective” default over the weekend after it paid its foreign dollar debt in rubles due to sanctions rules.
Russia’s finance ministry on Monday (11) accused foreign countries of wanting to force Russia into an “artificial default” through unprecedented sanctions over Ukraine and said it would meet its debt obligations.
Finance minister Anton Siluanov said Moscow will start legal proceedings if it is declared in default by the West.
A cascade of defaults on payments by Russian companies could also seriously disrupt the market.