Tomorrow is the 'Big Day' for bond-holders. Get ready for some possible drama...
Russia could default as soon as next month, Morgan Stanley says
- Thread starter ajacobson
- Start date
Exactly. Russia is a "моська" (M.W. will know what that means). Trying to bark up an elephant. Pathetic.
To understand how Putin barks up an elephant you should read this (really happened):
It is 5 December 1989 in Dresden, a few weeks after the Berlin Wall has fallen. East German communism is dying on its feet, people power seems irresistible.
Crowds storm the Dresden headquarters of the Stasi, the East German secret police, who suddenly seem helpless.
Then a small group of demonstrators decides to head across the road, to a large house that is the local headquarters of the Soviet secret service, the KGB.
"The guard on the gate immediately rushed back into the house," recalls one of the group, Siegfried Dannath. But shortly afterwards "an officer emerged - quite small, agitated".
"He said to our group, 'Don't try to force your way into this property. My comrades are armed, and they're authorised to use their weapons in an emergency.'"
That persuaded the group to withdraw.
But the KGB officer knew how dangerous the situation remained. He described later how he rang the headquarters of a Red Army tank unit to ask for protection.
The answer he received was a devastating, life-changing shock.
"We cannot do anything without orders from Moscow," the voice at the other end replied. "And Moscow is silent."
That phrase, "Moscow is silent" has haunted this man ever since. Defiant yet helpless as the 1989 revolution swept over him, he has now himself become "Moscow" - the President of Russia, Vladimir Putin.
And? Russia is still an extreme lightweight, both economically and militarily. It's a third-world country with nuclear weapons. And there is actually quite a lot of doubt on whether their nuclear weapons will work. Those need very delicate maintenance otherwise they deteriorate fairly quickly. Russia may not be technologically capable of maintaining them.
If they launch them, and we have a bit of luck, they might explode before leaving Russian territory. On condition that launching them will already not fail.
Russia can even not do the maintenance of their oil and gas wells. They need all the time Western companies who should do that. Nordstream 2 was also build by US and EU companies.
Actually the deterioration (or "poisoning") would not cause premature detonation, but no detonation at all or very partial detonation.
It's pointless to debate with you because you don't want to be honest. You try to make points about educational standards and back up your stance with GDP figures that are totally unrelated. You don't even want to get my point, which was about Russian education and that any brain drain can be replenished in time, all domestically.
Then the US has waged incursions and invasions for the past 60 years. Which one did they really win? Hardly any. And that with the supposed most powerful military machine in the world. My point is that wars are complicated. You try to dumb everything down to a baby level and think that is how the world can be understood.
It's pointless to argue with someone who does not care about the most basic etiquette and truth and facts. Won't respond to your posts re Russia anymore because you seem to make up your "truth and facts" along the way.
Then the US has waged incursions and invasions for the past 60 years. Which one did they really win? Hardly any. And that with the supposed most powerful military machine in the world. My point is that wars are complicated. You try to dumb everything down to a baby level and think that is how the world can be understood.
It's pointless to argue with someone who does not care about the most basic etiquette and truth and facts. Won't respond to your posts re Russia anymore because you seem to make up your "truth and facts" along the way.
Toward a $150 Billion Default Nightmare
What happens with bond payments due Wednesday could kickstart Russia's first foreign-currency default since the 1917 revolution
By
Sydney Maki,
Eliza Ronalds-Hannon, and
Selcuk Gokoluk
March 14, 2022, 11:01 PM CDT
Russian Police officers run to detain a man holding a poster that reads “No to war,” during a protest outside the Kremlin on March 13.
Photographer: Getty Images
Russia’s economy is fraying, its currency has collapsed, and its debt is junk. Next up is a potential default that could cost investors billions and shut the country out of most funding markets.
Warning lights are flashing as the government kickstarts the process of paying $117 million in interest on dollar bonds Wednesday, a key moment for debt holders who’ve already seen the value of their investments plunge since Russia invaded Ukraine last month.
The government says that all debt will be serviced, though it will happen in rubles as long as sanctions — imposed because of the war — don’t allow dollar settlements. Failure to pay, or paying in local currency instead of dollars, would start the clock ticking on a potential wave of defaults on about $150 billion in foreign-currency debt owed by both the government and Russian companies including Gazprom, Lukoil and Sberbank.
Such an event will revive memories of previous crises, including Russia in 1998, when it defaulted on some ruble-denominated debt, and Argentina three years later.
Signs of looming financial damage are becoming apparent at many of the world's biggest money managers, including BlackRock Inc. and Pacific Investment Management Co. But it’s not likely to be limited to these giant funds. Because much of Russia’s debt was rated investment grade just weeks ago, the securities were pervasive across global fixed-income portfolios and benchmarks, meaning the impact could ripple across pension funds, endowments and foundations.
“This will be a monumental default,” said Jonathan Prin, a portfolio manager at Greylock Capital Associates. “In dollar terms, it will be the most impactful emerging-market default since Argentina’s. In terms of broader market impact, it’s probably the most broadly felt emerging-market default since Russia itself in 1998.”
What Russia Owes
Companies are on the hook for about $105 billion in foreign-currency debt
Source: Bloomberg
On the Bloomberg Terminal, click here for a full list of foreign-currency bonds
Russia is already a commercial pariah, crippled by sanctions and the exodus of foreign firms such as Coca-Cola Co. and Volkswagen AG since the war started. The government has responded with capital controls, restricting outflows of money to protect the economy and the ruble.
Businesses and households are facing a double-digit economic slump and inflation accelerating toward 20%. About half of the country’s foreign-exchange reserves — some $300 billion — have been frozen, according to the finance minister. Regardless of the Kremlin's policy on foreign debt payments, companies will find it harder to service their obligations as falling demand hits sales and profits.
Because of the sanctions, and various decrees Russia introduced in response, a default appears all-but inevitable. Swaps markets put about a 70% chance on it happening this year. Fitch Ratings says it’s “imminent.” Indicative pricing on the country’s bonds values some of them near 20 cents on the dollar. Just days before the invasion, those same notes traded above par.
Bond Deadline
Russian bonds with interest due March 16 have slumped
Source: Bloomberg
In addition to bonds crumbling to distressed levels, the conflict has left its mark on multiple markets. The ruble has plunged about 35% against the dollar this year, and local stock trading has been shut for two weeks.
Russia’s late-1990s default was on domestic debt, so a foreign-currency default would be the first since the aftermath of the 1917 Revolution, when the Bolsheviks refused to recognize the czar’s debts.
What happens with bond payments due Wednesday could kickstart Russia's first foreign-currency default since the 1917 revolution
By
Sydney Maki,
Eliza Ronalds-Hannon, and
Selcuk Gokoluk
March 14, 2022, 11:01 PM CDT
Russian Police officers run to detain a man holding a poster that reads “No to war,” during a protest outside the Kremlin on March 13.
Photographer: Getty Images
Russia’s economy is fraying, its currency has collapsed, and its debt is junk. Next up is a potential default that could cost investors billions and shut the country out of most funding markets.
Warning lights are flashing as the government kickstarts the process of paying $117 million in interest on dollar bonds Wednesday, a key moment for debt holders who’ve already seen the value of their investments plunge since Russia invaded Ukraine last month.
The government says that all debt will be serviced, though it will happen in rubles as long as sanctions — imposed because of the war — don’t allow dollar settlements. Failure to pay, or paying in local currency instead of dollars, would start the clock ticking on a potential wave of defaults on about $150 billion in foreign-currency debt owed by both the government and Russian companies including Gazprom, Lukoil and Sberbank.
Such an event will revive memories of previous crises, including Russia in 1998, when it defaulted on some ruble-denominated debt, and Argentina three years later.
Signs of looming financial damage are becoming apparent at many of the world's biggest money managers, including BlackRock Inc. and Pacific Investment Management Co. But it’s not likely to be limited to these giant funds. Because much of Russia’s debt was rated investment grade just weeks ago, the securities were pervasive across global fixed-income portfolios and benchmarks, meaning the impact could ripple across pension funds, endowments and foundations.
“This will be a monumental default,” said Jonathan Prin, a portfolio manager at Greylock Capital Associates. “In dollar terms, it will be the most impactful emerging-market default since Argentina’s. In terms of broader market impact, it’s probably the most broadly felt emerging-market default since Russia itself in 1998.”
What Russia Owes
Companies are on the hook for about $105 billion in foreign-currency debt
Source: Bloomberg
On the Bloomberg Terminal, click here for a full list of foreign-currency bonds
Russia is already a commercial pariah, crippled by sanctions and the exodus of foreign firms such as Coca-Cola Co. and Volkswagen AG since the war started. The government has responded with capital controls, restricting outflows of money to protect the economy and the ruble.
Businesses and households are facing a double-digit economic slump and inflation accelerating toward 20%. About half of the country’s foreign-exchange reserves — some $300 billion — have been frozen, according to the finance minister. Regardless of the Kremlin's policy on foreign debt payments, companies will find it harder to service their obligations as falling demand hits sales and profits.
Because of the sanctions, and various decrees Russia introduced in response, a default appears all-but inevitable. Swaps markets put about a 70% chance on it happening this year. Fitch Ratings says it’s “imminent.” Indicative pricing on the country’s bonds values some of them near 20 cents on the dollar. Just days before the invasion, those same notes traded above par.
Bond Deadline
Russian bonds with interest due March 16 have slumped
Source: Bloomberg
In addition to bonds crumbling to distressed levels, the conflict has left its mark on multiple markets. The ruble has plunged about 35% against the dollar this year, and local stock trading has been shut for two weeks.
Russia’s late-1990s default was on domestic debt, so a foreign-currency default would be the first since the aftermath of the 1917 Revolution, when the Bolsheviks refused to recognize the czar’s debts.
And Ukraines GDP per capita is $4,384. Literally on par with a shithole African country like Nambia. So the question is, why does the world care about Ukraine? Isn't it also incredibly unimportant in the global economy too(except for oil/gas and bioweapon labs)
Today it's Ukraine, tomorrow another nation. The Twitter and Facebook social media socialites move at blazing speed from one issue to another that they can shed tears and get outraged over. Has nothing to do with proximity or GDP. Its just because the entire narrative is pushed on social media. Many other calamities struck over the past years where no a single of them showed the slightest amount of empathy. Everyone has their wound points and issues that they choose to get outraged over. If I was Russian and my life was uprooted in Russia and I or my parents emigrated and if I had a mediocre life now I would probably also blast Putin and Russia. Have hardly heard anything of those Russians that are highly successful in whatever discipline one chooses.
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