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From Belarus and Minsk Gulag

Bloomberg named three scenarios for Russia’s possible default on foreign debts. What it will be will be revealed on March 16, when Russia must pay interest on dollar bonds worth $117 million.

1️⃣ Russia pays interest on dollar bonds in dollars. This temporarily prevents a debt crisis, investors will expect payments on dollar bonds maturing on April 4th.

2️⃣ Russia will redeem dollar bonds in rubles. Some bond contracts provide for this option, but not bonds that are due March 16, so most investors will see this as a default.

3️⃣ Russia will not pay at all. In this case, Russia will have a 30-day grace period to correct the situation until April 15, otherwise a classic hard default will occur: Russia will be blocked from access to financing, investors will lose funds.

Non-payment or payment in rubles instead of dollars will lead to a potential wave of defaults on about $150 billion in foreign currency debt. Russia’s bond debt is $39.9 billion, and foreign currency debt of Russian companies reaches $105 billion, including Gazprom – $25.5 billion, Russian Railways – $4.9 billion, Lukoil and Sberbank – $3 billion each.

The agency recalls that on March 14, the Ministry of Finance gave a payment order for the payment of coupon income on bonds for $117.2 million on March 16, but did not indicate in what currency the money would be paid.

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Treadstone 71

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