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Sun Jun 26, 2022, 08:41 PM

Russia Defaults on Foreign Debt for First Time Since 1918

Last edited Mon Jun 27, 2022, 12:08 AM - Edit history (1)

Source: Bloomberg

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.

For months, the country found paths around the penalties imposed after the Kremlin’s invasion of Ukraine. But at the end of the day on Sunday, the grace period on about $100 million of snared interest payments due May 27 expired, a deadline considered an event of default if missed.

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.

But given the damage already done to the economy and markets, the default is also mostly symbolic for now, and matters little to Russians dealing with double-digit inflation and the worst economic contraction in years.



Read more: https://www.bloomberg.com/news/articles/2022-06-26/russia-defaults-on-foreign-debt-for-first-time-since-1918?utm_source=twitter&utm_content=business&utm_campaign=socialflow-organic&utm_medium=social&cmpid=socialflow-twitter-business

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Reply Russia Defaults on Foreign Debt for First Time Since 1918 (Original post)
LetMyPeopleVote Jun 26 OP
bucolic_frolic Jun 26 #1
Phoenix61 Jun 26 #4
LetMyPeopleVote Jun 26 #7
OnlinePoker Jun 26 #22
C Moon Jun 26 #2
Baked Potato Jun 26 #3
dweller Jun 26 #5
IronLionZion Jun 26 #6
Chin music Jun 26 #17
IronLionZion Jun 26 #20
AntiFascist Jun 26 #8
Lil Liberal Laura Jun 26 #9
SergeStorms Jun 26 #21
NJCher Jun 26 #30
Irish_Dem Jun 26 #10
SheltieLover Jun 26 #15
BumRushDaShow Jun 26 #11
madinmaryland Jun 26 #12
Eyeball_Kid Jun 26 #23
mobeau69 Jun 26 #13
pazzyanne Jun 26 #26
SheltieLover Jun 26 #14
machoneman Jun 26 #16
LudwigPastorius Jun 26 #19
Wednesdays Jun 26 #24
Chin music Jun 26 #18
blue-wave Jun 27 #40
Chin music Jun 27 #41
Cha Jun 26 #25
lastlib Jun 26 #27
SouthernDem4ever Jun 26 #28
Historic NY Jun 26 #29
littlemissmartypants Jun 26 #31
CloudWatcher Jun 27 #32
quakerboy Jun 27 #33
ColinC Jun 27 #34
Lovie777 Jun 27 #36
gab13by13 Jun 27 #35
BumRushDaShow Jun 27 #37
dupagelib Jun 27 #38
Turbineguy Jun 27 #39
LetMyPeopleVote Jul 2 #42

Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:44 PM

1. They blew all their capital in a war they can't win

How smart was that?

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Response to bucolic_frolic (Reply #1)

Sun Jun 26, 2022, 08:47 PM

4. That's what happens when you let ego drive your decision

making process. My heart breaks for what has been done to Ukraine but I couldn’t admire them any more for standing their ground.

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Response to Phoenix61 (Reply #4)

Sun Jun 26, 2022, 08:50 PM

7. It will be fun to see how Putin tries to spin this

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Response to bucolic_frolic (Reply #1)

Sun Jun 26, 2022, 10:21 PM

22. They have plenty of capital, just no way to access it.

Even their gold reserves have now been sanctioned.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:46 PM

2. A drugged up leader. Like we had.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:46 PM

3. Time to phone Vladdy and ask for a credit card number,

and a good address.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:48 PM

5. Uh oh repugs

there goes your under the table rubles …


✌🏻

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:50 PM

6. Less rubles for the NRA and GOP this election year

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Response to IronLionZion (Reply #6)


Response to Chin music (Reply #17)

Sun Jun 26, 2022, 10:17 PM

20. Those 2 are too selfish to share with their other GOP folks

so that money likely went straight into their own offshore accounts

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:50 PM

8. Ah, they missed the May 27th deadline, Happy Memorial Day Putin! n/t

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:58 PM

9. Don't worry, Vlad!

Your sex-slave Donnie will just reach into one of his many trillion-dollar bank accounts and. . .oh. Wait.

Sorry.

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Response to Lil Liberal Laura (Reply #9)

Sun Jun 26, 2022, 10:18 PM

21. He just may have beaucoup dollars now.

There's no telling how much he stole from the American people, and there's always his cult to fatten his wallet anytime he asks.

I'm certain he could afford Vlad's interest payment, but I think the cash only flows one-way in that deal. Russia gets all the U.S. State secrets in return. The Big Orange Pig didn't take those boxes marked 'Top Secret' to Mar-ma-lardo by accident.

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Response to SergeStorms (Reply #21)

Sun Jun 26, 2022, 11:28 PM

30. there's the $250 million

He took from the rubes, supposedly to fight election fraud. Last I read, no records have been produced to show he spent any of that money for the purpose for which he promised.

About a week or so ago, there were many of the legal talking heads saying this could be major fraud.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 08:59 PM

10. Sociopaths are destroying the world. For their ego and control issues.

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Response to Irish_Dem (Reply #10)

Sun Jun 26, 2022, 09:32 PM

15. Yes they are



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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 09:10 PM

11. Have been following and waiting for a couple months for this

Russia defaults on debt for first time since 1998

By Ben King
Business reporter, BBC News

Published

36 minutes ago



Russia has defaulted on its debt for the first time since 1998 after missing a Sunday deadline to make a $100m interest payment. Russia has the money and is willing to pay, but sanctions made it impossible to get the payments to international creditors. The Kremlin has been determined to avoid a first default since 1998, and a major blow to the nation's prestige. The Russian finance minister branded the situation "a farce". Russia has seemed on an inevitable path to default since sanctions were first imposed by the US and EU following the invasion of Ukraine.

These restricted the country's access to the international banking networks which would process payments from Russia to investors around the world. The Russian government has said it wants to make all of its payments on time, and up until now it had succeeded. About $40bn of Russia's debts are denominated in dollars or euros, with around half held outside the country. The default is the first since 1998, at the chaotic end of Boris Yeltsin's regime.

The $100m interest payment was due on 27 May. Russia says the money was sent to Euroclear, a bank which would then distribute the payment to investors. But that payment has been stuck there, according to Bloomberg News, and creditors have not received it. The money had not arrived within 30 days of the due date, that is, Sunday evening, and so is considered a default. Euroclear wouldn't say if the payment had been blocked, but said it adheres to all sanctions.

Default seemed inevitable when the US Treasury decided not to renew the special exemption in sanctions rules allowing investors to receive interest payments from Russia, which expired on 25 May. The Kremlin now appears to have accepted this inevitability too, decreeing on 23 June stating that all future debt payments would be made in roubles through a Russian bank, the National Settlements Depository, even when contracts state they should be in dollars or other international currencies.

https://www.bbc.com/news/business-61929926

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 09:19 PM

12. Heh! So apparently Vlad is not the wealthiest man in the world...

I guess his wealth is a little less the tRump’s.

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Response to madinmaryland (Reply #12)

Sun Jun 26, 2022, 10:33 PM

23. Vlad's fortune is frozen, not spent.

He didn’t default. Russia did.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 09:29 PM

13. Good job Joe! You got all the other countries together, held them together and made this work.

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Response to mobeau69 (Reply #13)

Sun Jun 26, 2022, 11:12 PM

26. + 1 nt

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 09:30 PM

14. ...

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 09:32 PM

16. O.K. but what are the real-world consequences of this default? Gvien this is a very rare event...

...one not encountered in like, forever, what does this really mean to their war effort, economy or anything at all?

Geez, one would think the Bloomberg would highlight any of the negatives right up front. Seems it's all symbolic (oil revenues) and will have ZERO impact on the Russkies. Yikes!

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Response to machoneman (Reply #16)

Sun Jun 26, 2022, 10:07 PM

19. Runaway inflation is a real possibility.

...followed by increasing unemployment.

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Response to LudwigPastorius (Reply #19)

Sun Jun 26, 2022, 10:45 PM

24. And if hyperinflation becomes like it was in Germany in 1923,

Rubles won't be even worth the paper it's printed on!



Here's a 20-million mark bank note from the time. In 1918, it would have bought 80 million loaves of bread.

In 1922, it would have bought 7 million loaves.

On New Year's Day 1923, it would have bought 40,000 loaves.

At the end of the month, it would have bought 28,500 loaves.

By July 1923, it would have bought 200 loaves.

In September, it would have bought two-thirds of a loaf.

In October 1923, it would have bought one two-hundredth of a loaf.

In November, it would have bought .0002 of a loaf.




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Response to LetMyPeopleVote (Original post)


Response to Chin music (Reply #18)

Mon Jun 27, 2022, 06:50 PM

40. Spot on

"Joes winning the Ukranian War against the folks who have been stealth attacking us since Obama."

They are using domestic malcontents to attack us from within.

Might I add Joe is winning the war against those who have been attacking the Western world, all continents included.

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Response to blue-wave (Reply #40)


Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 10:59 PM

25. TY Pres Biden & the Western Democratic

World!💙

💙💛

💛

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 11:17 PM

27. Sorry Vlad, no more borrowing to finance your little war.....

Your credit rating just went to zero. Yathink Brudder Xi gonna bail you out of this one? Not if he's as smart as we suspect.

Maybe you could hock North Korea? That's not much security. You're in deep doo-doo, Vladdy.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 11:22 PM

28. I hope everyone remembers that Putin is Trumps BFF

Asshole.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 11:24 PM

29. they just shifted 200 million in gold

[link:https://www.bloomberg.com/news/articles/2022-06-21/switzerland-imports-russian-gold-for-first-time-since-invasion|]

Switzerland imported gold from Russia for the first time since the invasion of Ukraine, showing the industry’s stance toward the nation’s precious metals may be softening.

More than 3 tons of gold was shipped to Switzerland from Russia in May, according to data from the Swiss Federal Customs Administration. That’s the first shipment between the countries since February.

The shipments represent about 2% of gold imports into the key refining hub last month. It may also mark a change in perception of Russian bullion, which became taboo following the invasion. Most refiners swore off accepting new gold from Russia after the London Bullion Market Association removed the country’s own fabricators from its accredited list.

While that was viewed as a de facto ban on fresh Russian gold from the London market, one of the world’s biggest, the rules don’t prohibit Russian metal from being processed by other refiners. Switzerland is home to four major gold refineries, which together handle two-thirds of the world’s gold.

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Response to LetMyPeopleVote (Original post)

Sun Jun 26, 2022, 11:48 PM

31. Editing note...

You could have posted four unique paragraphs of content if you were to delete the two paragraphs that are redundant. ❤

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Response to LetMyPeopleVote (Original post)

Mon Jun 27, 2022, 01:56 AM

32. And yet the Ruble is really strong?

I don't understand how the Dollar is so weak vs. the Ruble. Anyone have a clue? I sure don't.

https://wise.com/us/currency-converter/usd-to-rub-rate?amount=1#rate-alerts

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Response to LetMyPeopleVote (Original post)

Mon Jun 27, 2022, 02:31 AM

33. Is this actually important?

Best I can tell the rouble is higher than it was last year, or at any point since 2015. Russia, last i checked, is making more per day on its oil than Ukraine is getting in aide.

So.. is there an actual consequence to this, or is it just another thing that means nothing in the face of india and china propping them up regardless?

Also.. maybe its time to consider whether India is a friendly country/valued trading partner?

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Response to quakerboy (Reply #33)

Mon Jun 27, 2022, 04:55 AM

34. No clue. Although wasn't 1918 around the fall of the Russian empire

Marking the rise of the Soviet Union? Or something?

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Response to ColinC (Reply #34)

Mon Jun 27, 2022, 07:46 AM

36. Well the infro from the internet . .....

December 1, 1991 lead to the final USSR collapse, and the country that nailed that outcome was Ukraine. Now I see why Putin hate the country so much.

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Response to quakerboy (Reply #33)

Mon Jun 27, 2022, 06:33 AM

35. Big Pharma has lots of factories in India,

where they make cheap drugs and ship them to America where they charge an arm and a leg for the cheap drugs.

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Response to LetMyPeopleVote (Original post)

Mon Jun 27, 2022, 09:08 AM

37. (late) NYT breaking on this now, but adds another tidbit of a caveat

Russia Misses Bond Deadline, Signaling Its First Default on Foreign Debt Since 1918


By Eshe Nelson

June 27, 2022 Updated 8:49 a.m. ET

Russia missed a deadline for making bond payments on Sunday, a move signaling its first default on international debt in more than a century, after Western sanctions thwarted the government’s efforts to pay foreign investors. The lapse adds to efforts to seal Moscow off from global capital markets for years.

About $100 million in dollar- and euro-denominated interest payments failed to reach investors within a 30-day grace period following a missed May 27 deadline. The grace period expired Sunday night.

A formal declaration of default would need to come from bondholders because ratings agencies, which normally declare when borrowers have defaulted, have been barred by sanctions from reporting on Russia. The Credit Derivatives Determinations Committee, a panel of investors that rules on whether to pay out securities linked to defaults, hasn’t been asked to make a decision on these bond payments yet.

But it appeared that the payments had not reached bondholders’ accounts as of Sunday night, as required by the bonds’ contracts. On Monday, Russia’s finance ministry said it had made the payments in May and they had been transferred to Euroclear, a Brussels-based clearinghouse, but subsequently blocked from reaching bondholders.

https://www.nytimes.com/2022/06/26/business/russia-default.html

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Response to LetMyPeopleVote (Original post)

Mon Jun 27, 2022, 10:12 AM

38. Who holds this debt?

How does it affect them and what recourse do they have?

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Response to LetMyPeopleVote (Original post)

Mon Jun 27, 2022, 11:15 AM

39. Now they can spend that money on the war.

And put-off that evil day of reckoning.

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Response to LetMyPeopleVote (Original post)

Sat Jul 2, 2022, 12:36 AM

42. The sanctions imposed by President Biden and our allies, since the invasion of Ukraine in February,

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