Russia has defaulted on its foreign debt for the first time since the 1917 Bolshevik Revolution. 9News
Russia defaulted on its domestic debts in the late 1990s but was able to recover from that default with the help of international aid.Insurance contracts that cover Russian debt have priced a 80 per cent likelihood of default for weeks, and rating agencies like Standard & Poor’s and Moody’s have placed the country’s debt deep into junk territory.Ratings agencies can lower the rating to default or a court can decide the issue.
Once that happens, provisions say all Russia’s other foreign bonds are also in default, and bondholders could then seek a court judgment to enforce payment. Investors who wanted out of Russian debt have probably already headed for the exits, leaving those who may have bought bonds at knocked-down prices in hopes of profiting from a settlement in the long run.Once a country defaults, it can be cut off from bond-market borrowing until the default is sorted out and investors regain confidence in the government’s ability and willingness to pay.
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