Experts talk about a unique default scenario, because the borrower is willing and able to pay, but can not.
After months of balancing on the brink of default, Russia has finally found itself just hours after a dramatic financial battle between the United States and other countries against the Kremlin over its invasion of Ukraine. This was reported by Bloomberg.
The grace period , which concerned payments on bonds worth about $ 100 million, and which did not occur as a result of the blockade large-scale sanctions, ends Sunday night.
If investors do not have their money by the deadline, then Monday morning will take place “default event” , according to the provisions of the bond.
“ Now the question is what will happen next, as markets face a unique scenario default borrower who is willing and able to pay but cannot, “Bloomberg writes.
For now, default will give rise to a largely symbolic development , given that Russia is already an economic, financial and political outcast in most countries of the world.
“The announcement of default is a symbolic event. The Russian government has already lost the opportunity to issue a debt denominated in dollars. As of now, Russia cannot borrow from most foreign countries,” said Takahide Kiuchi, an economist at the Nomura Research Institute in Tokyo. p>
But the default will show as the United States, Europe, and others have “tightened the screws” on Russia since its invasion of Ukraine in February to make it impossible for Russia to conduct normal financial business.
< In addition, for Russia it will mark the first foreign default since the Bolshevik renunciation of the debts of the tsarist era in 1918.
At the same time, large ratings agencies typically issue a default default declaration. And there will be no surprises here.
However, bondholders can be expected to make their own statement, and at this stage this may be the biggest intrigue of the expected event.
Yes, bondholders may want to deliberately delay this moment by taking a wait-and-see attitude, watching in which direction the war in Ukraine will develop, as well as the level of sanctions imposed on Russia. This tactic can be beneficial, as bondholders can still hope to get a chance to get their money back, or at least some of it.
It will be recalled that the aggressor country came very close to default earlier this year. But several times at the last minute she managed to avoid default by changing the method of payment .
However, this opportunity was closed in May – just a few days before the $ 100 million payments were due. The United States has closed a sanctions loophole that allowed American investors to receive payments on sovereign bonds.
“Russia's default. What does this mean? “ , – read about it in the material Yulia Samaeva for ZN.UA. Most countries regularly take out loans, but they try to avoid sovereign defaults because then it is difficult to find people willing to give money to debt. Therefore, every sovereign default is a remarkable event.
