Moody's: Russia may face credit default for payments in rubles

April 15 (UPI) -- Russia has moved closer to defaulting on its debts because of its switch to paying with rubles instead of U.S. dollars, the credit rating agency Moody's said.

The agency said unless Russia returns to making its payments in dollars in accordance with its loan agreements by May 4, creditors will be able to claim insurance payouts while harming the country's financial reputation.

Russia has disputed that current agreements prevent it from paying the loans in rubles.

"Russia reportedly made payments on two bonds maturing in 2022 and 2042 in rubles rather than U.S. dollars which represents a change in payment terms relative to the original bond contracts and therefore may be considered a default under Moody's definition if not cured by 4 May, which is the end of the grace period," Moody's said, according to The Guardian.

"The bond contracts have no provision for repayment in any other currency other than dollars."

Earlier this week, S&P Global placed Russia under a "selective default" rating after the Russian government repaid about $650 million in debt in rubles instead of dollars. S&P said it didn't expect investors to be able to convert the ruble payments into U.S. dollars that were equivalent to the original amount due.

S&P said Russia had 30 days to repay their loans in U.S. dollars to avoid defaults.

The Russian finance ministry said, though, they consider the debts paid "in full" with its transaction in rubles and believe it has not violated the rules.