Madrid summit and Russian bond default: 29 June 2022 recalled
A look back at a day when NATO leaders in Madrid heard of a new permanent U.S. base in Poland, two days after Russia defaulted on Eurobonds.
What did the NATO summit in Madrid produce on 29 June 2022? Among its announcements, U.S. President Joe Biden said a new permanent U.S. military base would be established in Poland: the headquarters of the 5th Army. The command had kept a forward command post in Poznań since the previous year. Poland's government had long requested such a base.
The financial backdrop
Two days earlier, on 27 June 2022, Russia had defaulted on two Taiwanese-owned Eurobonds worth US$100 million. Western sanctions had led Euroclear to block Russian attempts to service the debt before the deadline. Russia described the default as artificially manufactured and called it "a farce".
As reported at the time, the default was expected to have few immediate consequences for Russia, which was already unable to borrow internationally because of the SWIFT ban on Russian banks.
The default was later widely described as Russia's first foreign sovereign debt default since 1918. It stemmed from sanctions and disrupted payment and clearing channels that stopped bondholders receiving funds. It did not mark an actual lack of capacity to pay, because dollar payments had become impossible under US and EU sanctions.
Earlier, on 2 June, Russia had missed a payment of $1.9 million in interest. That sum fell short of the $75 million minimum needed to trigger a cross-default across other Russian eurobonds.
