What a Russia debt default would mean for financial markets as Ukraine invasion continues The threat of a Russian default on sovereign debt is seen near, but investors so far aren’t panicking over any potential hit to global financial markets.
“While a default would be symbolic, it seems unlikely that it will have significant ramifications, both in Russia and elsewhere,” said William Jackson, chief emerging markets economist at Capital Economics, in a Monday note.
Talk of a Russian default, however, stirs memories of past turmoil. In August 1998, Russia devalued the ruble, defaulted on domestic debt and declared a moratorium on payment to foreign creditors. The resulting crisis sent tremors through financial markets, resulting in the collapse and subsequent rescue of hedge fund Long Term Capital Market.
International Monetary Fund Managing Director Kristalina Georgieva on Sunday said Western sanctions in response to the country’s Feb. 24 invasion of Ukraine would hit Russia hard, shrinking Russians’ real incomes and purchasing power. She warned that a Russian default can no longer be thought of as an “improbable event.”
Georgieva, in an interview with CBS News’ Face the Nation, noted that while Russia has the money to service its debt, sweeping sanctions against the nation’s financial institutions and central bank means it can no longer access it. Ratings firms have sharply downgraded Russian debt, with Fitch last week warning of an imminent default as a result of sanctions. .........
https://www.marketwatch.com/story/what-a-russia-debt-default-would-mean-for-financial-markets-as-ukraine-invasion-continues-11647288614?mod=home-page
