Home » World » Russia is on the verge of defaulting on its debt and creating a new “Lehman crisis”? Four major shocks in the world | International | Sanli News Network SETN.COM

Russia is on the verge of defaulting on its debt and creating a new “Lehman crisis”? Four major shocks in the world | International | Sanli News Network SETN.COM


International Center/Reported by Shi Yuyun

▲ Putin sent troops to attack Ukraine, causing the ruble to plummet and foreign companies to flee. (Photo / flip from Vladimir Putin Facebook)

Since Russia invaded Ukraine on February 24, it has entered the 22nd day. Western countries have imposed severe sanctions on Russia. This war has caused the ruble to plummet and foreign companies to flee. Russia needs to pay interest on sovereign bonds for the first time, with two interest payments totaling US$117 million (about NT$3.3 billion). The Russian government may be on the verge of its first international debt default since 1917, which may trigger a new “Lehman Crisis”.

Due to Russia being sanctioned by Western countries, the payment of interest on sovereign bonds is restricted. According to the “Financial Association” report, Russia has issued a total of 15 international bonds, with a total face value of about 40 billion US dollars (about 1.12 trillion Taiwan dollars), about half of which are invested by international investors. holder holds.

At present, Russia has to pay the interest on March 16 first. The bond linked to it was listed in 2013 and needs to be paid in US dollars. The payment agent is Citibank. Russia also has to pay US$615 million (about NT$17.2 billion) in interest in March.

In addition, Russia’s first bond principal payment will be due on April 4, with a total of 2 billion US dollars (about 56 billion Taiwan dollars) of bonds due. Russia used to have ample solvency, but now more than half of its overseas reserves have been frozen due to sanctions.

At present, the market generally expects that Russia may default, which will have four major impacts. First, the rating agencies will downgrade the defaulted bonds and long-term foreign exchange ratings, which means that Russia will not be able to access the international capital market.

Second, it will cause many large global fund management companies to face serious financial losses; secondly, it may trigger Russian debt default insurance, which is credit default swap (CDS), causing losses to some banks, and it is estimated that about $6 billion in CDS must be paid.

Fourth, Russian banks and investment institutions would also suffer losses and could be in trouble with these bonds, which are part of the capital buffer. Sanctions by various countries have put the Russian economy in unprecedented danger, and the important economic lifeline that depends on it has also caused red companies to look after them, and the Russian industrial map may be reshuffled.

Leave a Comment