The cost of guaranteeing Russian government bonds by credit default swaps (CDS) has risen to a record high. President Putin has signed a decree allowing payments to some foreign creditors to be limited to rubles, raising concerns regarding default.
According to ICE Data Services, the cost of guaranteeing $ 10 million worth of Russian bonds is regarding $ 5.8 million in prepayment plus $ 100,000 a year. This suggests that the default probability is considered to be regarding 80%. The prepayment portion has risen from regarding $ 4 million last week. Russia’s dollar-denominated bond issuance amounts to regarding $ 33 billion, according to data compiled by Bloomberg.
On weekends, Russia introduced rules to distinguish between investors in countries that have imposed sanctions on government bond payments and others. Investors in hostile countries will be paid in rubles, even foreign currency bonds. According to the announcement on the 7th, these countries / regions include the United States, the United Kingdom, the European Union (EU), and Japan.
news-rsf-original-reference paywall">Original title:
news-rsf-original-reference paywall">Russia Swaps Signal 80% Chance of Default On Ruble Payout Decree(excerpt)