Russia warns of possible payment delays for domestic Eurobond holders

Russia's National Settlement Depository (NSD) said that Russian holders of domestic corporate Eurobonds may see delays in receiving payments

Russia's National Settlement Depository (NSD) said on Wednesday that Russian holders of domestic corporate Eurobonds may see delays in receiving payments settled through international agents, as transactions get snarled up by sanctions.

"Delays are possible for payments cleared via international depositories. This could be linked to 'manual' processing of the orders linked to Russian companies as well as with a need to get clarifications from European regulators," NSD said in a statement to Reuters.

Russian sovereign and corporate Eurobond payments were previously processed by international clearing and settlement firms such as Clearstream and Euroclear, which process payments and confirm ownership of assets before sending cash to Western bondholders and then to NSD for domestic holders.

However, Western sanctions and countersanctions by Moscow mean that the payment process on hard currency bonds issued by Russia or Russian companies has become much more complicated, with some payments delayed or getting stuck in transit.

Euroclear, owned by exchanges and banks, and Clearstream, part of Deutsche Boerse, both said they would stop settling trades in Russian securities in response to European Union financial sanctions after Russia's invasion of Ukraine last month.

Clearstream and Euroclear did not immediately respond to a request for comment.

Russian companies are due to pay $18.5 billion in external debt, including coupon payments, by year-end, ITI Capital analysts estimate, and the Russian finance ministry is due to pay another $3.4 billion in sovereign Eurobonds.

In a separate statement, NSD said that it is receiving Eurobond payments from Euroclear but will not process these until Euroclear gets clarifications from European regulators.

NSD said it is not getting payments from Clearstream.

"After curbs are lifted, payments will be processed... as usual," NSD said.

Dmitry Lesnov, head of the customer service department at Finam, said that his company is not receiving payments made via Euroclear or Clearstream.

"We do not receive payments on foreign securities made via Euroclear, NSD receives them but does not yet process (them), (we are) awaiting further clarifications," he said.

(Reporting by Reuters; Editing by Alexander Smith)