Russia's sovereign bond coupon payments stopped: US Treasury source

[yaesu]

“Today is the deadline for Russia to make another debt payment,” the spokeswoman said. “Beginning today, the US Treasury will not permit any dollar debt payments to be made from Russian government accounts at U.S. financial institutions. Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default.”

The country has a 30-day grace period to make the payment, the source said.

Russia, which has a total of 15 international bonds outstanding with a face value of around $40bn, has managed to avoid defaulting on its international debt so far despite unprecedented western sanctions.

If Russia fails to make any of its upcoming bond payments within their pre-defined timeframes, or pays in roubles where dollars, euros or another currency is specified, it will constitute a default.

[PortTack]

1. Fingers crossed!

[Me.]

2. Small Price To Pay For Their Horrific Behavior

[The Unmitigated Gall]

3. Fuck them...in every possible way.

[onecaliberal]

5. 👆🏻👆🏻👆🏻

[AlexSFCA]

4. I wonder if he'll force oligarchs to pay

[SergeStorms]

7. All their shit is frozen too.

Unless they're going to pay with super-yachts, billion dollar dachas, or private airliners, they're shit out of luck.

[former9thward]

10. Actually very few of them have been sanctioned.

Vladimir Potanin, the CEO of Norilsk Nickel, and considered Russia's richest man, has not been sanctioned. Norilwk Nickel is Russia's wealthiest company and has not been sanctioned. Why? They produce minerals needed by the West.

Only about 20 of the oligarchs have been sanctioned out of hundreds to pick from. Even Roman Abramovich, Putin's close friend and billionaire has not been sanctioned by the U.S.

[SergeStorms]

11. That's right!

The wheels of capitalism must be greased by the blood of innocents. Can't slow down the economy, can we?

[lagomorph777]

15. The super-yachts are being ticketed, towed, and booted.

So, no help there either.

[SergeStorms]

16. I'd love to see.....

a "Boot" on a super yacht! That would be hilarious.

[gaskinite]

6. So what happens when the default?

Nm

[SergeStorms]

8. Same as anyone.

Their credit rating goes to hell and it costs them a shit-ton more to borrow money.

Lenders can attempt to confiscate property, but do you want to repossess their country when they're pointing nuclear weapons at you?

[Jarqui]

9. Here's an article I came across when I asked myself that question

https://www.aljazeera.com/economy/2022/3/16/what-happens-if-russia-defaults-on-its-150bn-debt

I'm not sure how reliable the article is. It wasn't terrible.

There are a number of articles like the above contemplating it - not all are exactly the same.

[A HERETIC I AM]

12. In this case it is a missed interest payment....

Which is significantly different from not repaying principle.

The interest payments on most sovereign bonds, including the US Treasuries that carry a “coupon” (meaning they make periodic interest payments) are typically paid twice a year. When the bond matures, the holder gets the last of the coupon payments and the entire face value back.

Any failure to make a timely payment on a coupon during the life of the bond is considered a default. They could however, delay or announce they will defer the payment, and make it at a later date (Or attempt to make the payment in Rubles, as mentioned in the article linked in the post above) This would have a deleterious effect however, as it reduces confidence in the ability of the issuer to make good on its obligations.

If they completely default, meaning they announce their bonds are worthless or will not be redeemed, then the holders of the bonds lose the principal amount they paid for the bonds. In the case of large institutions or bond funds, this could be in the tens or even hundreds of millions of dollars. There is no recourse. There is nothing to claim, unlike a corporate bond where a failed company might have a factory to sell off and the bond holders get the proceeds, with a sovereign bond, there is nothing to sell.


Of course, Russia is probably already there, as far as lack of confidence is concerned. I don’t have access to an international bond trading platform, but I am willing to bet that any new debt paper they tried to issue now would carry a hefty coupon rate, if an offering was even successful.

[Diraven]

13. Only $40 billion?

The US national debt is 500 times that. I think it a bit of an exaggeration to say defaulting on one payment on that small amount will wreck their economy.

[yaesu]

14. Yes, but remember, russian GDP is the same as Texas, their economy is much, much smaller. nt