Sanctions and disrupted payment systems have left holders of bonds sold by Russia and its companies bracing for defaults, according to Ehsan Khoman, Head of Emerging Markets Research (EMEA).
Fears eased in mid-March when the first interest payments due since Russia’s invasion of Ukraine came through, proving that at least some of the country’s borrowers could still service their foreign currency bonds. The relief was short-lived.
In early April, an attempt to pay Russian government dollar-debt obligations was rejected by U.S. banks, causing S&P to downgrade Russia’s credit rating to “selective default”. This now all but guarantees Russia’s first external debt default since 1917. What could the potential fallout from this be for global markets? Ehsan explains.
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