The probability of default was estimated at 80%.
Russia will be forced to declare a “nightmarish” default for their foreign currency-denominated bonds after the United States made a final decision to ban the Russian government from making payments through American banks. This was stated by Timothy Ash, senior sovereign strategist for emerging markets, Bluebay Asset Management, reports Insider .
“As of today, the US Treasury will not allow any dollar payments on debts from Russian government accounts in US financial institutions,” the publication quotes.
< Timothy Ash estimated the probability of default at this time at 80%, as Russia still has enough dollars to pay. First, Russia still has access to some of its foreign exchange reserves. Secondly, the country earns money from oil and gas exports.
However, according to Ash, in the long run, default will be a “nightmare” for Russia.
According to the expert, the Russian government will probably still struggle to find banks that are ready to process these payments. However, he says, it is difficult to imagine a negotiation process that the Russian government can hold with investors in such a situation.
“International banks are unlikely to want to have such a business. There is no light at the end of the tunnel,” he added./p>
It is noted that the US Treasury Department on Monday blocked the bank JPMorgan in processing redemption payments and coupons in the amount of more than $ 600 million on dollar bonds.
JPMorgan is a Russian correspondent bank abroad.
Russia, which has 15 international bonds in circulation At a cost of about $ 40 billion, it has so far managed to avoid defaulting on its international debt, despite unprecedented Western sanctions.Timothy Ash added that the default could harm US bondholders, but it is “their own fault” for investing in the country.
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It will be recalled that Russian banks began to repay their obligations on domestic bonds in rubles , not dollars and euros
April 4 Russia failed to pay in dollars its last foreign debt on bonds 2022 and 2042. The payment made in rubles was not accepted by a foreign correspondent bank – JPMorgan.
The RF Ministry of Finance tried to explain that it was forced to pay in rubles against the US ban on using frozen foreign exchange reserves to service foreign debt.
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However, as you know, this initiative was announced by the United States only on April 4.
While on March 29 on the official website of the RF Ministry of Finance it was reported that the payment will be made in the currency of the Russian Federation at the official exchange rate of the Bank of Russia.
