On May 22, 2023, the President of Russia signed Decree No. 364 (“Decree 364”) On Certain Amendments to Decree of the President of Russia No. 430 dated July 5, 2022 (“Decree 430”) requiring Russian businesses who have issued Eurobonds to issue replacement securities to enable holders whose bonds are held through Russian depositaries to receive payments.

Prior to these amendments, Decree 430 required Russian legal entities having obligations related to the Eurobonds (the “Russian Obligors”) to either (i) pay holders of their Eurobonds who hold through Russian depositaries (custodians) directly through such depositaries, bypassing foreign infrastructure, including international clearing systems, or (ii) issue Russian replacement bonds on the same commercial terms (interest, maturity, principal amount) as the Eurobonds (the “Replacement Bonds”).  The Central Bank has clarified that legal entities “having obligations related to Eurobonds” comprise of any Russian legal entities of the same group as the issuer and any entities mentioned in the Eurobond transaction documentation, such as Russian guarantors under guaranteed Eurobonds or Russian borrowers under loan participation notes.  

Holders of the Eurobonds through Russian depositaries, including Russian investors and foreign investors who are not investors from “unfriendly jurisdictions”, had an option to acquire the Replacement Bonds in exchange for their Eurobonds. The Replacement Bonds can be freely traded in Russia, unaffected by the restrictions imposed on the Russian clearing system, thus providing the holders of the Replacement Bonds with certainty of payment and liquidity.

Following the amendments, the issuance of the Replacement Bonds is no longer an option for Russian Obligors, but rather their obligation. Such Russian Obligors are now required to issue the Replacement Bonds before January 1, 2024 and offer them to the holders of the Eurobonds through Russian depositaries. 

The holders of the relevant Eurobonds will still have the right to choose whether to acquire such Replacement Bonds in exchange for the relevant Eurobonds, and will still have an option to keep the Eurobonds and to continue to receive payments directly through Russian depositaries bypassing the foreign infrastructure in accordance with the procedure referred to in Decree 430. It is not clear at the moment if the Central Bank of Russia is going to introduce any changes to this procedure that has been in place for almost a year now.

For the holders of the Eurobonds held through non-Russian depositaries and for the holders from “unfriendly jurisdictions” holding through Russian depositaries the situation remains unchanged. 

Holders in non-Russian depositaries neither have a right to receive the payment directly in Russia, nor are they required to be offered the Replacement Bonds, and holders from “unfriendly jurisdictions” holding through Russian deppositaries cannot claim the Replacement Bonds and any payments made to them directly in Russia bypassing foreign infrastructure shall be credited to a special restricted S-type account, where the funds are essentially frozen.

Russian Obligors and holders of the relevant Eurobonds may apply for a license of the Russian Governmental Commission for Control over Foreign Investments that provides a derogation from the abovementioned restrictions.

To read more about sanctions imposed by the U.S., UK and EU on Russian persons in connection with the Russia-Ukraine conflict and Russian countersanctions, please visit our blog here.

List of the affected Eurobonds

No.IssuerReg S / 144A ISINInitial Principal AmountCoupon RateMaturity DateGuarantor  / Borrower
Alrosa Finance S.A.XS1843441731 / US02109TAD46$500 mln4.65%09.04.2024Guarantor –  PJSC Alrosa
 2.Alrosa Finance S.A.XS2010030919 / US02109TAE29$500 mln3.1%25.06.2027Guarantor –  PJSC Alrosa
 3.Polyus Finance Plc.XS1713474325 / US73181LAA98$500 mln4.7%29.01.2024Guarantors –  JSC Polyus Krasnoyarsk; PJSC Polyus
 4.Polyus Finance Plc.XS2396900685 / US73181LAB71$700 mln3.25%14.10.2028Guarantors –  JSC Polyus Krasnoyarsk; PJSC Polyus
 5.RZD Capital PlcCH1100259816 CHF  450 mln3.125No fixed maturity dateBorrower – RZD OJSC
 6.RZD Capital PlcXS2318748956RUB 20 bln7.45018.09.2028Borrower – RZD OJSC
7. RZD Capital PlcXS2271376498 RUB 25 bln6.59802.03.2028Borrower – RZD OJSC
 8.RZD Capital PlcCH0522690715 CHF  250 mln0.8412.03.2026Borrower – RZD OJSC
 9.RZD  Capital PlcCH0419041634CHF  150 mln1.19503.04.2028Borrower – RZD OJSC
 10.RZD Capital PlcCH0419041618CHF 350 mln0.89803.10.2025Borrower – RZD OJSC
 11.RZD Capital PlcXS1843431690RUB 15 bln7.67510.09.2026Borrower – RZD OJSC
 12.RZD Capital PlcXS1843437036 RUB 500 mln2.223.05.2027Borrower – RZD OJSC
 13.RZD Capital PlcXS1843442465RUB 20 bln8.804.10.2025Borrower – RZD OJSC
 14.RZD Capital PlcXS1701384494RUB 15 bln7.919.10.2024Borrower – RZD OJSC
15. RZD Capital PlcCH0379268748CHF 450 mln2.102.10.2023Borrower – RZD OJSC
 16.RZD Capital PlcXS1574787294RUB 15 bln8.9903.03.2024Borrower – RZD OJSC
 17.RZD Capital PlcXS1574068844USD 500 mln4.37501.03.2024Borrower – RZD OJSC
 18.RZD Capital PlcXS1502188375RUB 15 bln9.207.10.2023Borrower – RZD OJSC
 19.RZD Capital PlcXS1041815116EUR 500 mln4.606.03.2023Borrower – RZD OJSC
 20.RZD Capital PlcXS0764220017USD 1.4 bln5.705.04.2022Borrower – RZD OJSC
 21.RZD Capital PlcXS0609017917GPB 650 mln7.48725.03.2031Borrower – RZD OJSC
 22.GTLK Europe Capital DACXS1577961516$500 mln5.125%31.05.2024           Borrower – JSC GTLK
 23.GTLK Europe Capital DACXS1713473608$500 mln5.95%17.04.2025           Borrower – JSC GTLK
 24.GTLK Europe Capital DACXS2010044381$550 mln4.949%18.02.2026Borrower – JSC GTLK
 25.GTLK Europe Capital DACXS2131995958$600 mln4.65%10.03.2027Borrower – JSC GTLK
 26.GTLK Europe Capital DACXS2249778247$500 mln4.8%26.02.2028Borrower – JSC GTLK
 27.GTLK Europe Capital DACXS2010027451$600 mln4.349%27.02.2029Borrower – JSC GTLK
 28.Celtic Resources Holdings DACXS2060792236$400 mln4.125%09.10.2024Borrower –[Nordgold group]
 29.Steel Capital SAXS2046736919 / US85805RAE80$800 mln3.15%16.09.2024Borrower – PJSC Severstal
 30.Phosagro Bond Funding DACXS2099039542 / US71922LAC37$500 mln3.05%23.01.2025Borrower – PJSC Phosagro
 31.Phosagro Bond Funding DACXS2384719402 / US71922LAD10$500 mln2.6%16.09.2028Borrower – PJSC Phosagro
 32.Metalloinvest Finance LimitedXS2400040973$650 mln3.375%22.10.2028Borrower – JSC HC Metalloinvest