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Russian default on its sovereign debt -- now vs. 1998


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A Russian debt default may be 'imminent'. What does that mean for bondholders? | Fortune

 

Russia owes roughly $40 billion worth of euro- and dollar-denominated sovereign debt, approximately $20 billion of which is held by foreigners, the Financial Times reports. The relatively small sums—the U.S. paid out $137.2 billion in interest payments on foreign-held debt in 2020 alone—means a Russian default is unlikely to pose a major systemic risk to the global financial system, but it will be enough to roil investors with exposure to Russian debt and downgrade the country's status as a trusted borrower. Up until a few weeks ago, when Putin invaded Ukraine, Russia was considered one of the world's safest bets for sovereign debt investment, due to the country's low GDP-to-debt ratio and its sizable foreign reserves. Russia likely still has enough cash to pay back its debts, but recent sanctions on Russian oil and gas exports may have closed off a major revenue stream for the country and strained its cash flow.

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