Putin’s government has said that all its debt will be serviced. But it also said investors from countries backing sanctions on Russia will be paid in rubles. If Russia fails to pay -- or tries to pay foreign-currency bonds in rubles, which may be treated as a default -- the fallout will hit not just the country’s sovereign bond market, but potentially all its corporate issuers as well. The full shock is likely to affect a Russian debt mound of about $150 billion.
“Everybody in the West -- financial institutions, businesses, politicians -- anticipated and assumed that we and Russia have skin in the game together, given the market’s economic covenant,” Beslik said. “Now it turns out that Russia has broken that covenant...and financial institutions as well as businesses have been taken for a costly ride, while people in Ukraine pay with their lives.”
-With assistance from Amine Haddaoui.
This article was provided by Bloomberg News.