Fitch may recognize a default on Belarusian Eurobonds by July 13

Sofiia Telishevska

The international rating agency Fitch lowered the long-term rating of Belarus in foreign currency from the level of CCC to pre-default C, which means the beginning of default or a process similar to default.

The rating downgrade is related to Minskʼs decision to pay payments for Eurobonds in Belarusian rubles, according to the agency ʼs release.

On June 29, Belarus made the first payment in local currency for the payment of interest on Eurobonds of 2027 in dollars. However, this is contrary to the bond documentation, which does not allow settlements in alternative currencies.

The agency warned Minsk that if payments in the relevant currency are not made by July 13, Fitch will consider it a default and lower the RDE of Belarus to the level of RD (restricted default), and the rating of this Eurobond issue to D.

The agency will also consider the exchange of Eurobonds for government bonds placed on the domestic market, which are denominated in dollars but settled in Belarusian rubles, as a default.