• Russian steelmaker Evraz has warned it faces a technical default after an interest payment on one of its bonds was blocked.
• It believes the payment was blocked because of sanctions on its biggest shareholder, Russian oligarch Roman Abramovich.
• Evraz said there’s no reason for it to default other than technical issues, however, and said it has sent the money.

Russian steelmaker Evraz has warned that it may be pushed into a technical default on its debt, saying it thinks its payments have been held up due to sanctions on its biggest shareholder, the oligarch Roman Abramovich.

London-listed Evraz said in a statement Monday that it had made a $19 million payment on a $700 million bond that matures next year.

But it said Societe Generale New York, its foreign correspondent bank, had blocked the payment for compliance reasons. Insider has contacted SocGen for comment.

The steelmaker said the hold-up had forced it to notify BNY Mellon, the bank responsible for getting the money to bondholders, about “the potential event of default.”

However, Evraz said it has the money and there are no reasons for a default to actually happen, other than technical issues.

“The company would like to highlight that apart from malfunction of financial infrastructure, there are no reasons for a potential event of default. The issuer has sufficient

liquidity

to complete the coupon payments,” it said.

Evraz said it understands that the hold-up is related to UK sanctions put in place against Abramovich, who owns 28.6% of the company, following Russia’s invasion of Ukraine.

The UK government earlier this month moved to freeze Abramovich’s assets in the country, to ban him from visiting, and to block citizens and companies from doing business with him.

It scuppered his plans to sell Chelsea FC, the soccer club he bought in 2003. Foreign Secretary Liz Truss accused Abramovich of being close to Russian President Vladimir Putin.

However, Evraz said at the time, and repeated in its statement Monday, that it stands on the position that Abramovich does not have control over the company.

Trading in the steelmaker on the London Stock Exchange — its primary listing — was suspended earlier in March as a result of sanctions on the oligarch.

Evraz’s default warning is a sign of the difficulties Western sanctions could cause for companies when it comes to paying their debts.

So far, Russian companies have surprised investors by continuing to meet their interest payments on dollar bonds. One investor told Insider last week they had received all their expected payments from Russian debtors.

The Russian government has also maintained its payments on its foreign bonds. It sent $66 million through to make good on coupon payments Monday, having sent $117 million last week.

However, ratings agencies such as Fitch and S&P have sharply downgraded Russia’s sovereign credit rating deep into “junk” territory.

Russian corporate and sovereign bonds have plunged in value, reflecting investors’ concerns that defaults could still be coming down the line.

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