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Russia pays dollar-bonds in roubles as it seeks to avoid default

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© Reuters. Russian rouble coin is seen in this illustration taken April 7, 2022. REUTERS/Dado Ruvic/Illustration

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LONDON (Reuters) – Russia’s finance ministry said on Thursday it had fulfilled obligations on two dollar-denominated Eurobonds “in full” by sending interest payments in roubles to its National Settlement Depository, in its latest bid to avoid a sovereign default.

Russia has been struggling to make payments on its $40 billion of international bonds since being hit with sweeping sanctions over its Feb. 24 invasion of Ukraine.

The latest payments amounting to 12.51 billion roubles ($234.5 million) were due on two Eurobonds maturing in 2027 and 2047 , whose terms do not allow for payments in Russia’s currency.

“Obligations on servicing the state securities of the Russian Federation were fulfilled by the finance ministry in full,” the ministry said in a statement.

Both dollar-denominated bonds have in their terms provisions that payments could be made under certain circumstances in euros, pounds sterling or Swiss francs. However, they do not foresee payments in roubles, the currency Moscow used in the latest transfer. Both issues also have a 30-day grace period on payments.

To avert default, funds broadly have to be paid in the correct currency into bondholders’ accounts within the prescribed timeframe.

The latest money transfers to the National Settlement Depository (NSD) come after President Vladimir Putin signed a decree on Wednesday to establish temporary procedures aimed at fulfilling Russia’s foreign debt obligations.

The ministry said it was transitioning to the procedure established by the decree, and funds will be disbursed in roubles to the NSD before reaching bondholders in stages, depending on the amount of sanctions.

While Eurobond holders whose ownership rights are contained within the country’s financial system will be paid in roubles, the holdings of investors to whom funds cannot be transferred due to sanctions imposed on Moscow will need to open a rouble account in the NSD to receive those funds.

It is unclear as yet whether foreign investors – many of whom will have to navigate sanctions imposed by their own governments – will be willing or even permitted to open such accounts.

But the wider process is beset with legal and commercial uncertainties, according to lawyers and analysts.

“It’s still unclear whether the paying agent of Russia bonds works for the government or the creditors,” said Mitu Gulati, a law professor at the University of Virginia and an expert on debt restructurings.

“The Russian lawyers put so many landmines in a contract, and it’s not even clear in which jurisdiction a creditor could potentially sue the country,” he said.

Russia has been on the brink of default since the U.S. Treasury decided in May against extending a key license that had allowed Moscow to keep paying bondholders despite the sanctions.

A 30-day grace period on interest payments worth $71.25 million and 26.5 million euros that were due May 27 expires on Monday. While Russia decided to send the money to the payment agent NSD before the U.S. Treasury’s decision, it is unclear whether the money made it further into bondholders’ accounts.

($1 = 53.3500 roubles)

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Easing chip shortages to help Volkswagen in H2 – CEO

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© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

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Reliance Chairman Mukesh Ambani steps down as director of telecom arm

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© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

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UBS Downgrades Ebay, Farfetch to Neutral on Guidance Risks

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© Reuters. UBS Downgrades Ebay (EBAY), Farfetch (FTCH) to Neutral on Guidance Risks

By Senad Karaahmetovic

UBS analyst Kunal Madhukar downgraded shares of Farfetch (NYSE:FTCH) and eBay (NASDAQ:EBAY) to Neutral from Buy.

EBAY shares are cut alongside the price target (to $48.00 from $60.00 per share) despite low expectations. Still, the analyst expects 2022 GMV to fall by 17%, which is worse than the guidance of 16%-14% and the Street’s consensus of 15%.

“We think the buy side may already be lower than the Street. YTD, the stock has been one of the better performers within the eCommerce space, benefiting from both a ~2% dividend yield and aggressive share repurchases. However, when the market rebounds, we think EBAY shares could lag smaller cap peers (which are likely to grow much faster in a recovery) until investors have better visibility into organic growth at eBay. Consequently, we think the shares likely will remain range-bound until visibility improves,” Madhukar told clients in a note.

The price target on Farfetch shares goes to $10.00 from the prior $13.00 as Madhukar sees too optimistic assumptions for growth from the side of the company’s management.

“In addition to slower growth, we think upside is limited by lack of visibility into key drivers of value, including FPS volumes and economics, as well as on China. Granted, the YNAP deal could be a positive catalyst (link), but if the disclosure is limited (like with the recent deal with Neiman Marcus Group or NMG), it may be challenging for investors to understand if it creates shareholder value or not. Last, FTCH remains a profitless-tech company in an environment where investors are acutely focused on profits, and thus, there is limited valuation support,” the analyst added.

Similar to eBay, Madhukar sees shares remaining “range-bound until we have better visibility into growth and/or the path to profitability.”

Shares of eBay and Farfetch are down 2.4% and 2.2%, respectively, in pre-market Tuesday.

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