It is unclear whether Russia will make two separate eurobond coupon payments of $117 million due today. Russia recently announced that it will make payments in Rubles. Russian Finance Minister Siluanov said today that the eurobond coupon payment may not reach bondholders.
Leading international rating agency Fitch has announced that if Russia makes its due US dollar coupon payments in rubles, it will mean default.
So what is the default? Default is a concept that arises when the debtor cannot pay its debt to the creditor when it is due. If a firm or country defaults, the concept of default interest arises. The defaulting country or company has to pay a certain amount of interest as it cannot pay its due debt.
The ability to make bond coupon payments in rubles is an option for some, but not an option for most. In other words, the lender will ask for the payment in dollars. Since Russia's reserves are blocked and there is no proper euro and dollar resources, a significant part of these bonds will be in technical default. Let's remember from the fact that the Evergrande coupon payment did not occur before: There is a legal period of 30 days. If payment is not made after 30 days, the default will have occurred. This will of course affect European banks, which will be more exposed to Russian counterparty risk. The most important underwriting here is on the French and Italian banks.
As of today, the Russian CDS is at the level of 2625. This time, the financial crisis phenomenon is more felt due to the sanctions.
Kaynak: Tera Yatırım
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