Russia could default on its debt within days

[dalton99a]

https://www.cnn.com/2022/03/14/investing/russia-economy-default/index.html

Russia could default on its debt within days
By Charles Riley, CNN Business
Updated 12:47 PM ET, Mon March 14, 2022

London (CNN Business) Russia has sent the clearest signal yet that it will soon default — the first time it will have failed to meet its foreign debt obligations since the Bolshevik revolution more than a century ago.

Half of the country's foreign reserves — roughly $315 billion — have been frozen by Western sanctions imposed after the invasion of Ukraine, Russian finance minister Anton Siluanov said on Sunday. As a result, Moscow will repay creditors from "countries that are unfriendly" in rubles until the sanctions are lifted, he said.

Credit ratings agencies would likely consider Russia to be in default if Moscow misses payments or repays debt issued in dollars or euros with other currencies such as the ruble or China's yuan. A default could drive the few remaining foreign investors out of Russia and further isolate the country's crumbling economy.

The default could come as early as Wednesday, when Moscow needs to hand over $117 million in interest payments on dollar-denominated government bonds, according to JPMorgan Chase. Although Russia has issued bonds that can be repaid in multiple currencies since 2018, these payments must be made in US dollars.

[lagomorph777]

1. Very good news.

[calimary]

31. And bad for Vlad!

Whatever works.

[BlueGreenLady]

2. What happens if a country defaults on it's bonds?

How will this affect Russians? I'm not fluent in economic topics.

[Reader Rabbit]

3. I'd like to know this, too.

I'm envisioning a big thug going to break Putin's kneecaps for non-payment, but I suspect that's just my fertile imagination.

[NJCher]

21. maybe

The FSB will put a bullet in the back of his head and claim the Mafia did it.

[SheltieLover]

50. From your keyboard to karma's ear!

[calimary]

36. It might be a more figurative encounter.

No literal “kneecapping” but more of a economic and social crippling.

Whatever works.

[ificandream]

4. I'd like to think that without money they can't continue the invasion. Hope I'm right.

[FSogol]

5. No one will loan them more money, countries will begin to seize Russian assets to service the debt.

Inflation in Russia will skyrocket.

[SoonerPride]

10. +1

This.

Or in other words, a total meltdown of their economy. From free fall to crash.

Of course the average Russian will feel it most.

But our sanctions are also biting into the oligarchs and their pain will be felt this time.

[cstanleytech]

13. Unfortunately it's probably not going to impact Putin and his gang.

In fact my bet is he and his ilk will probably end up even wealthier as they buy up asset’s of people hurt by it.

[A HERETIC I AM]

19. It's not that no one will loan them money...

Rather no one will buy any bonds issued by them.

It’s sort of the same, but different!

They might find a large bank to actually cut them a check ( make a loan to the Russian Central Bank) but if they try and make another bond issuance, no one will touch that paper for anything.

[FSogol]

30. +1 n/t

[ProfessorGAC]

22. It's Quite Likely Catastrophic

Defaulting on loan or bond payments is almost certain to have a massive negative effect on their currency.
This means the creditors will progressively get less back if they pay in devolving currency.
It also puts a screeching halt to borrowing & probably drops bond value to junk, but with weak yield.
That traps a lot of their money supply domestically so higher prices and limited cash means substantial inflation.
Foreign investors will have huge difficulty expatriating their investments, and the ruble will be worth practically nothing.
Foreign trade (inflow) dwindles, in a country with a production base too small to adjust.
These things would happen to a much lesser degree here due to the overall scope of the economy.
But, Russia is an economic pipsqueak. Hyperinflation is clearly a possibility.

[yaesu]

23. Russian government has borrowed relatively little. JPMorgan estimates that it had about $40 billion

of foreign currency debt at the end of last year, with about half of that held by foreign investors.

International banks are owed more than $121 billion by Russian entities, according to the Bank for International Settlements. European banks have over $84 billion total claims, with France, Italy and Austria the most exposed, and US banks owed $14.7 billion.

Even if Moscow halts payments to foreign investors on all sovereign debt, the roughly $60 billion default — including ruble debt held overseas — would be in the same ballpark as Argentina's in 2020 — a non-event for markets., so it doesn't sound like it will have much of an impact

Per article

[JCMach1]

37. i.e. bad for Russians, but world effect is minimal

[reACTIONary]

42. See post 5.

In addition to the consequences listed, the bond holders, e.g. JP Morgan or whoever, would lose their interest payments and probably could not foreclose on the capital, unless given relief by the seizure of assets.

[L. Coyote]

47. It will be more difficult to borrow money, issue bonds, etc.

Investors will go elsewhere.

[IronLionZion]

57. They'll have trouble finding new investors

or getting any countries or banks to lend to them. That will make it harder for them to fund their operations if they need to build roads or bridges or whatever, even to purchase food or raw materials or equipment.

Would you buy Russian bonds? Mutual funds everywhere will choose to not include them in international bond portfolios.

[Budi]

6. "What have you got to lose?" - dotard

"Russia if you're listening"..
Seriously Vlad? You trusted this guy!?

😬

[OMGWTF]

15. IKR? ETTD

Everything Trump touches dies.

[Budi]

58. Yup. Belly up & bloated

[SheilaAnn]

7. trump owes russia a lot of money. Can they get their money from him now? n/t

[erronis]

14. Guessing trump will pay in ruble iou's. Less than a penny on the dollar. trump stiffing putin....

While putin has been shafting trump/the US.

[quakerboy]

33. If i follow correctly

Before all this kicked off a rouble was worth about a penny and a third. And now its worth about .8 cents.. Its actually rising slightly now.

I mean.. on the one hand it "lost" like half its value. on the other.. it didnt really have much value to start with.

[JCMach1]

39. Half it's value is the key metric. Yen, for example, has low value per unit

As well... It's about overall relative strength...

[calimary]

38. I'd imagine Putin's not gonna like that.

Imagine Putin taking revenge on the donald. Almost too sweet even to think about!

[Ford_Prefect]

48. Trump helped them hide many times more than he "owes" them.

The leisure industry at Trump's level is a very good way to launder dirty money. Just ask the oligarchs and drug lords about all those holiday village resorts sprinkled around the Caribbean, the far east and the
Mediterranean owned by off-shore holding companies with curious names and opaque ownership registry.

[Omnipresent]

8. I heard Rachel mention on her program that...

Russia is forty times the size of France, but barely has the economy of France.

If that is true, than what the fuck kind of country, is it?!

[dalton99a]

9. Here:

[Omnipresent]

35. Thanks Rachel!

[Evolve Dammit]

45. great info. Thanks!

[BumRushDaShow]

49. Here's a variation of that (as a pie chart)

(Russia's carve-out is right along the edge of the green section adjacent to that section's legend label "Europe" )

[dalton99a]

56. +1

[Ford_Prefect]

51. As a point of reference only: California has about 39.5 million people while Ukraine had 41 million.

[madville]

11. The vast majority of it is wilderness, farmland, and/or frozen

Don’t really understand the comparison about geographical size relating to their respective economies.

[OMGWTF]

17. Or political preference.

Don't you just love those Red States vs. Blue State maps that show the country blood red? The fact is most of that is dirt and dirt doesn't vote. It's just supposed to trick us into thinking the country is majority Republican, when, thank Goddess, that's not true.

[Omnipresent]

43. Too bad cows can't vote in those red states!

[ProfessorGAC]

24. That 40 Seems Geographic

They have only a bit over twice the population of France.
But, they are very low on the list for GDP per capita. (PPP) It's under $12,000 per citizen and that was 80 something in the world. France has a PPP of almost 4x that of Russia
Greece ranks higher than russia., and they're fairly low compared to other EU countries.

[yaesu]

26. Proving the point that size doesn't matter

[calimary]

41. I can't help but suspect, though,

that with Putin, size very much indeed DOES matter. And somebody bent on domination, intimidating and overpowering any and all challengers, seems to be behaving as though size is EVERYTHING.

[reACTIONary]

44. Its a very large, very empty gas station...

... with nukes.

[BlueIdaho]

12. How long before they start

Printing million ruble notes?

[SergeStorms]

16. Pootie Poot isn't quite the "genius" Trump thinks.....

he is. Of course anyone foolish enough to take Trump's advice on anything should be a candidate for a rubber room anyway.

[WarGamer]

18. they'll just turn on the printers and pay the debt with stacks of rubles.

As fast as the printers can run...

[monkeyman1]

20. tank's , aircraft, will be repo'd !!!

[ffr]

25. It's being reported that Putin will stay on course, doubling down, wash-spin-repeat

for the next 60 days in his attempts to evict all Ukrainians off their homeland before something in Russia may begin to occur.

It would appear that he is a single move chess player. When TFG failed to cancel out Joe Biden's flagging election campaign in its infancy, he failed his boss. Only Putler knew of the pending strength and resolve Joe Biden would bring to democracies worldwide.

What a mess dictators create when they're failures on this level.

[lagomorph777]

34. TrumPutin's cockamamie Ukraine blackmail scheme only elevated Biden's campaign.

People suddenly saw Biden as a threat to Trump, and voted for Biden.

Putin put Trump up to it, purely for the payoff of making Ukraine defenseless. It was just dumb luck that Biden's son had some tangential business deal in Ukraine. Putin told Trump that he could Trump up some bullshit about Biden, a la buttery-mails, and it would help him.

[Wingus Dingus]

52. Some of that could be to strengthen his negotiating position.

They're in talks now, I believe.

[Slammer]

27. rubles

Russia’s Finance Minister Says Country Will Pay Debt in Rubles Until Central Bank Sanctions Lifted
Mar 13, 2022

https://www.wsj.com/livecoverage/russia-ukraine-latest-news-2022-03-11/card/russia-s-finance-minister-says-country-will-pay-debt-in-rubles-until-central-bank-sanctions-lifted-c9lJghNNgGzbzdPzbsLR

They can print rubles. And probably claim any exchange rate that they care to.

The debt payments are specifically supposed to be made in dollars so even if they paid, Russia would still technically be in default.

But it's certainly muddy the waters if the creditors accepted the rubles.

[PatSeg]

40. "Will Pay Debt in Rubles"

That part cracked me up. Who is going to accept rubles for payment?

[Slammer]

46. propaganda

Likely the intent is that Russia will make the offer, the creditor will refuse, and Russia will claim it tried to pay its debts.

It's not going to work for them financially. But it might help them on the propaganda front when dealing with neutral countries.

It won't make those countries extend them credit. But it might help them be willing to do cash business with the Russians like buying their oil.

[aggiesal]

28. $117M is peanuts for the Billion $$'s oligarchs ...

Have one of them pay the bill.

[AZLD4Candidate]

29. Hey, Russia, why not pay in used toilet paper? It's worth about the same.

[LetMyPeopleVote]

53. Satire-TFG Offers to Help Russia File for Bankruptcy

Link to tweet

[Budi]

59. No kidding! His go-to last gasp.

Bankruptcy!

[SheltieLover]

54. Kicking for visibility

[Brother Buzz]

55. Think China will throw Russia a lifeline?