Gazprom board debates dumping subsidiary shares

Russian state-owned energy giant Gazprom’s board today debates dumping shares of Gazprom International, a subsidiary that operates the holding company’s foreign projects.

Russia’s largest company by revenue, Gazprom has seen its international dealings plummet as Western governments and companies work to isolate Russia in response to its invasion of Ukraine. Though Gazprom made good on $1.3 billion in dollar-denominated payments last week, it has payments on nearly $25 billion in foreign debt due next week. The company is likely dumping shares of its international subsidiary to stock up on foreign reserves. This could indicate signaling on the part of corporate Russia that it is willing to make payments and that sanctions should not bar it from doing so.

An imminent Gazprom default depends largely on whether or not Moscow makes payments on its dollar-denominated debts, one of which is due tomorrow. Analysts believe a government default on external debt, the country’s first since 1917, is imminent, spelling trouble for Gazprom’s latitude to service its debts. Such a default would be one of the largest in history, potentially affecting nearly $150 billion. Still, given the context of the war, contagion would be unlikely to crash other emerging markets as its cause is not systemic.