Russian (External) Debt in Doubt

At 40% recovery rate, credit default swaps (CDSs) imply 100% probability of default. Ratings agencies have downgraded Russian debt.

 

Update, 4/11 8:30am Pacific:

S&P – Russia in default

Reuters discusses possible Russian response.

30 thoughts on “Russian (External) Debt in Doubt”

  1. ltr

    https://news.cgtn.com/news/2022-04-10/Chinese-mainland-records-1-351-new-confirmed-COVID-19-cases-196UySaiEPS/index.html

    April 10, 2022

    Chinese mainland reports 1,351 new COVID-19 cases

    The Chinese mainland recorded 1,351 new confirmed COVID-19 cases on Saturday, with 1,318 linked to local transmissions and 33 from overseas, according to data from the National Health Commission on Sunday.

    A total of 25,111 new asymptomatic cases were also recorded on Saturday, and 195,948 asymptomatic patients remain under medical observation.

    Confirmed cases on the Chinese mainland now total 164,393, with the death toll at 4,638.

    Chinese mainland new locally transmitted cases

    https://news.cgtn.com/news/2022-04-10/Chinese-mainland-records-1-351-new-confirmed-COVID-19-cases-196UySaiEPS/img/91c447ea8fe440d1afaaaa75360018ca/91c447ea8fe440d1afaaaa75360018ca.jpeg

    Chinese mainland new imported cases

    https://news.cgtn.com/news/2022-04-10/Chinese-mainland-records-1-351-new-confirmed-COVID-19-cases-196UySaiEPS/img/485b16949b0c4f9e8abfcef442c4a5c0/485b16949b0c4f9e8abfcef442c4a5c0.jpeg

    Chinese mainland new asymptomatic cases

    https://news.cgtn.com/news/2022-04-10/Chinese-mainland-records-1-351-new-confirmed-COVID-19-cases-196UySaiEPS/img/57efd75ab04143d1b1ceeb0bf036e0ba/57efd75ab04143d1b1ceeb0bf036e0ba.jpeg

      1. baffling

        ltr, what does this have to do with russian debt? its is advertisement and propaganda from the ccp.

      2. baffling

        and ltr, you have still not apologized for calling me a racist. you are simply acting like a bully with such behavior. but you will not silence me. i will stand for what is right.

        1. Ivan

          I don’t think “ltr” read or respond to responses. Probably is mostly run by a Chinese robot. I have been told their government only pay them about 1 yuan per posting.

    1. GREGORY BOTT

      Russia is screwed. Their debt is less than 1% of total global debt. Their markets will liquidate and then there is nothing left. Civil War in Russia is likely.

    2. pgl

      What is interesting about this article Brucie boy? Did you even read it? I doubt it and even if you did – I doubt you have the slightest clue what it says.

      Let me help our village idiot out. The facts noted in this story is that Russian has defaulted on its debt – which has been covered quite well by our host’s posts – something else our village idiot likely read either.

      So what’s new here? Oh yea – the fellow who wrote is one of those slime ball attorneys who gets paid big bucks when the vultures pick over bad debt. Whoopie!

      1. Bruce Hall

        I’m sorry, Lucy.. Did you just contribute something of interest for the discussion? I must have missed it entirely.

    3. Menzie Chinn Post author

      Bruce Hall: Well, if it took a decade to resolve debt claims from the early-2000s Argentine default, you can only imagine what it will be like in this case.

      1. pgl

        What would be interesting is a follow-up to the pricing issue you started your post with:

        ‘At 40% recovery rate, credit default swaps (CDSs) imply 100% probability of default.’

        Finance types talk about the probability of default and the expected loss under default when ascertaining the appropriate price of a bond or as you note credit default swaps.

  4. ltr

    https://www.medrxiv.org/content/10.1101/2022.04.05.22273393v1

    April 7, 2022

    CHANGES IN LIFE EXPECTANCY BETWEEN 2019 AND 2021: UNITED STATES AND 19 PEER COUNTRIES
    By Ryan K. Masters, Laudan Y. Aron and Steven H. Woolf

    ABSTRACT

    BACKGROUND Prior studies reported large decreases in US life expectancy during 2020 as a result of the COVID-19 pandemic, disproportionately affecting Hispanic and Black populations and vastly exceeding the average change in life expectancy in other high-income countries. Life expectancy estimates for 2021 have not been reported. This study estimated changes in life expectancy during 2019-2021 in the US population, in three US racial/ethnic groups, and in 19 peer countries.

    METHODS US and peer country death data for 2019-2021 were obtained from the National Center for Health Statistics, the Human Mortality Database, and overseas statistical agencies. The 19 peer countries included Austria, Belgium, Denmark, England and Wales, Finland, France, Germany, Israel, Italy, Netherlands, New Zealand, Northern Ireland, Norway, Portugal, Scotland, South Korea, Spain, Sweden, and Switzerland. Life expectancy was calculated for 2019 and 2020 and estimated for 2021 using a previously validated modeling method.

    RESULTS US life expectancy decreased from 78.86 years in 2019 to 76.99 years in 2020 and 76.60 years in 2021, a net loss of 2.26 years. In contrast, peer countries averaged a smaller decrease in life expectancy between 2019 and 2020 (0.57 years) and a 0.28-year increase between 2020 and 2021, widening the gap in life expectancy between the United States and peer countries to more than five years. The decrease in US life expectancy was highly racialized: whereas the largest decreases in 2020 occurred among Hispanic and non-Hispanic Black populations, in 2021 only the non-Hispanic White population experienced a decrease in life expectancy.

    DISCUSSION The US mortality experience during 2020 and 2021 was more severe than in peer countries, deepening a US disadvantage in health and survival that has been building for decades. Over the two-year period between 2019 and 2021, US Hispanic and non-Hispanic Black populations experienced the largest losses in life expectancy, reflecting the legacy of systemic racism and inadequacies in the US handling of the pandemic. Reasons for the crossover in racialized outcomes between 2020 and 2021, in which life expectancy decreased only in the non-Hispanic White population, could have multiple explanations.

  5. joseph

    So there is going to be a run-off election in France. Voters will have to choose between the fascist Putin fan and the millionaire banker who wants to raise their retirement age.

    Tough call.

    1. GREGORY BOTT

      Fascist??? More likely gobalist. The con is you actually believing. When markets liquidate, the party is over. Countries will die. Florida would be one state quickly hit. They would default and disband quickly.

  6. macroduck

    Russia’s credit ratig has been lowered to “selective default” because of a failure to pay in accordance with the terms of a debt contract. That rating had already been at CC, downgraded from CCC- on March 17 on account of too much green beer.

    What is generally understood but could not be reflected in Russia’s rating is that external reserves are kaput. It could not be reflected because Russia’s rating was already too low to reflect further bad news. International creditors’ claims and war reparations claims will amount to more than all of Russia’s frozen assets – official and private.

    Ukraine has not asked for financial recompense for stolen asset yet, but if allied powers agree to such a claim, any earnings from trade with allied countries will be vulnerable to seizure. The current situation in which only non-allied countries will trade with Russia could become Russia’s long-run fate. That’s not just because of trade sanctions, but because trade with allied countries won’t produce a return.

    Russia would then be faced with the choice to negotiate scheduled reparations payments in order to trade with allied countries.This “Consequences of the Peace” situation is what the return of the Cold War may look like, because of Russia’s repeated resort to hot war on countries which wanted good relations with Western Europe.

  7. Menzie Chinn Post author

    T.Shaw: Gee, I got taxed when I worked…as a student. Agree, though — after Trump’s/Republican Congress’s shift in tax burden from corporations and millionaires to those in lower income deciles, we should be working to reverse the efforts of various Republican policymakers at federal and state level.

    1. AndrewG

      I agree with you there, but it’s still fair to point out that during the pandemic, the people holding lots of college debt were the people most likely to make it through that terrible employment contraction and not just survive but thrive: college grads. It’s reasonable to question helping them this much.

      1. baffling

        when you leave the STEM and business degrees, that argument begins to fall apart. there are a lot of 4 year degrees that were not very marketable during and after the pandemic. and the debt of those students is helping to hold back economic activity.

  8. ltr

    Still redistributing US wealth after all this time from hard-working taxpayers to doctors, lawyers and ——–, the Biden admin this week extended the student loan payment moratorium though August 2022.
    Still redistributing US wealth after all this time from hard-working taxpayers to doctors, lawyers and ——–, the Biden admin this week extended the student loan payment moratorium though August 2022.
    Still redistributing US wealth after all this time from hard-working taxpayers to doctors, lawyers and ——–, the Biden admin this week extended the student loan payment moratorium though August 2022.

    [ An intolerably malevolent, shamefully false comment. ]

    1. baffling

      kind of like the malevolent, shamefully false comment you asserted towards me ltr. i expect an apology from you for such malicious and bullying behavior on your part, blindly calling me racist with no evidence whatsoever. or are you the only one permitted to act like a bully on this blog, ltr? ignoring me and not apologizing only adds to the disrespect and bullying behavior you have displayed.

  12. pgl

    https://www.msn.com/en-us/money/markets/russia-says-it-will-sue-if-forced-into-a-default-which-would-be-the-country-s-first-sovereign-debt-default-in-over-a-century/ar-AAW4Bun?ocid=msedgdhp&pc=U531&cvid=bc23d75868ac4dcd9d073df8414c11ee

    Wait – Russia is not honoring its debt obligations which has led to S&P downgrading its credit rating. And Russia is going to sue? Sue who and on what grounds? Seriously?

    This is like some gun crazed moron shooting people in Times Square and then suing NYC for the loss of his bullets.

  13. Barkley Rosser

    T. Shaw,

    I have just seen a poll that says that twice as many Republicans hate Biden as hate Putin. Are you among those? Since you seem to want to play the QAnon groomer mongering game, it would not surprise me. I mean, Putin is saving western civilization from “gay parades,” whoopee!!! That certainly justifies killing thousands of innocent civilians in Ukraine.

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