Bloomberg said Russia’s first external default since 1917 was “almost inevitable”
Bloomberg called Russia’s first external default in more than a hundred years inevitable. Russia’s default in 1998 was declared on domestic debt.
Russia’s first external default since 1917 will be announced due to harsh sanctions imposed on the country for an attack on Ukraine, the agency wrote.
The default of the Russian Federation threatens against the background of the fact that the US Treasury has suspended the payment of dollar debts from Russian accounts in American banks. When the hard currency payment attempt was blocked, Russia violated the terms of the two bond issues by paying investors in rubles instead of dollars.
“It pushed the countdown clock one step closer to default. The risks of default in the Russian Federation emerged after Russia’s invasion of Ukraine in February and sanctions against the aggressor – Russian banks, companies and oligarchs, “said the agency.
Some analysts doubt that the Putin regime’s deep financial and political isolation will allow Russia to move away from default.
According to the latest research by ICE Data Services, debt insurance coverage data provides an almost 90% probability of default within 12 months.
“If Russia fails to arrange payments to bond holders during the grace period, and no dollars are credited to the accounts, it is a default,” said Lutz Rogmeier, chief investment officer of Capitulum. Asset Management based in Berlin.
As Bloomberg notes, despite the sanctions, Russia still earns billions of dollars from oil and gas exports. Because of these receipts, the Russian government said they had the funds to pay off their creditors.
Recall that the international rating agency S&P Global Ratings downgraded Russia’s foreign currency ratings to “selective default”. The reason is the increased risk that Moscow will not be able and unwilling to fulfill its obligations to foreign debt holders.
Source: korrespondent
