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Will Russia Default on Its Foreign Debt?

March 16, 2022 (EIRNS)—Today was the deadline on a $117 million interest payment on Russia’s foreign bonds, the first payment since Washington’s imposition of hellish sanctions on Russia in late February, which included the “freezing” (read stealing) of about $300 billion in Russian central bank reserves deposited abroad. Russian Finance Minister Anton Siluanov instructed a correspondent bank to pay the creditors in rubles, and he then put the onus on the U.S. to allow the conversion of those payments to dollars out of the stolen assets.

“The capability or incapability of meeting our obligations in foreign currency equivalent does not depend on us,” Siluanov stated. “We have the money, we have made the payment, now the ball is in the court, primarily, of the American authorities.” Siluanov has previously accused the West of trying to engineer an “artificial default” by stealing Russia’s funds.

The London Guardian turned to one of their stable of investment bankers, the doubly misnamed Victoria Scholar, the head of investment at Interactive Investor (the U.K.’s second-largest retail investment platform), to present their bloodthirsty policy: “The onset of war, Western sanctions, the exodus of international conglomerates and freefalling investor confidence have led to Russia’s downfall with its currency, financial system, and the wider economy in a state of ruin.... Although Russia technically has a 30-day grace period before an official default, a full-blown collapse is almost inevitable.”

Otherwise, default is considered a foregone conclusion. MarketWatch reported that a default has already been priced in by the market, noting that Russia’s sovereign dollar bonds are already trading at around 20 cents on the dollar. The biggest potential cost to Russia from a default is being locked out of global capital markets, MarketWatch wrote, or at least facing higher borrowing costs for a prolonged period. But, as one financial expert admitted, “sanctions have done that anyway.”

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