The default is a grim marker in the country’s rapid transformation into an economic, financial and political outcast.
Russia defaulted on its foreign-currency sovereign debt for the first time in a century, the culmination of ever-tougher Western sanctions that shut down payment routes to overseas creditors.penalties imposed after the Kremlin’s invasion of Ukraine
Vladimir Putin’s government is the first Russian administration to be unable to pay its foreign debt since 1918.It’s a grim marker in the country’s rapid transformation into an economic, financial and political outcast. The nation’s eurobonds have traded at distressed levels since the start of March, the central bank’s foreign reserves remain frozen, and the biggest banks are severed from the global financial system.
“Most bondholders will keep the wait-and-see approach,” said Takahide Kiuchi, an economist at Nomura Research Institute in Tokyo.During Russia’s financial crisis and rouble collapse of 1998, then president Boris Yeltsin’s government defaulted on $US40 billion of its local debt.The last time Russia fell into default vis-à-vis its foreign creditors was more than a century ago, when the Bolsheviks under Vladimir Lenin repudiated the nation’s staggering Czarist-era debt load in 1918.
“Is it a justifiable excuse to say: ‘Oh well, the sanctions prevented me from making the payments, so it’s not my fault?’ ” Mr Malik said.“The broader issue is that the sanctions were themselves a response to an action on the part of the sovereign entity,” he said, referring to the invasion of Ukraine. “And I think history will judge this in the latter light.
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