Russia has defaulted on its foreign-currency sovereign debt for the first time in a century
ussia defaulted on its foreign-currency sovereign debt for the first time in a century, the culmination of ever-tougher Western sanctions that shut down payment routes to overseas creditors.
But given the damage already done to the economy and markets, the default is also mostly symbolic for now, and matters little to Russians dealing with double-digit inflation and the worst economic contraction in years.Russia has pushed back against the default designation, saying it has the funds to cover any bills and has been forced into non-payment.
“Most bondholders will keep the wait-and-see approach,” Takahide Kiuchi, an economist at Nomura Research Institute in Tokyo. By some measures it approached a trillion dollars in today’s money, according to Loomis Sayles’ Malik, who is also author of ‘Bankers and Bolsheviks: International Finance and the Russian Revolution.’the equivalent of almost $20 billion of Russia’s eurobonds as of the start of April.“Is it a justifiable excuse to say: ‘Oh well, the sanctions prevented me from making the payments, so it’s not my fault’?” Malik said.
His comments were prompted by the grace period that ended on Sunday. The 30-day window was triggered when investorsThe cash got trapped after the US Treasury let a sanctions loophole expire, removing an exemption that had allowed US bondholders to receive payments from the Russian sovereign. A week later, Russia’s paying agent, the National Settlement Depository, was also sanctioned by the European Union.
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