Eurobond default: Russia is going to file a lawsuit against Ukraine after Kiev failed to repay its $3bn Eurobond and $75m of interest that fell due yesterday, the Russian finance ministry has announced. Russia has repeatedly said it would regard non-payment of the eurobond – which was issued by the government of former President Viktor Yanukovich in late 2013 and bought by Russia in its entirety – a default that would trigger legal action. “A corresponding lawsuit will be filed in an English court in compliance with the established procedures,” the ministry said on its website.
For his part, Ukraine’s Prime Minister Arseny Yatseniuk had repeatedly said that Ukraine would not repay the Eurobond. His government, which has separately reached an agreement with private creditors to restructure its sovereign and sovereign-guaranteed debt, also insists the Eurobond is commercial debt and that it cannot offer Russia a better deal than other creditors.
The bond was issued just two months before Yanukovich fled in the face of bloody street protests triggered by his seeking to halt Ukraine’s swing toward European integration in favor of closer economic ties with Russia. A new Free Trade Agreement between Ukraine and Russia comes into force today, a development which has prompted Russia to annul its own FTA with its western neighbour.