Russia default risk splashes with Putin decree on bonds

(ANSA) - MILAN, 07 MAR - New leap in the cost of insuring Russian government bonds against the risk of a default after the decree approved by President Vladimir Putin, which allows creditors of foreign currency bonds to be repaid in rubles.

    According to Bloomberg, citing data from Ice Data services, the main clearing house for European CDS, the likelihood of default implicit in the cost of debt insurance, CDS, hit a record high of 80%.

The CDs that ensure $ 10 million in debt for five years cost $ 5.8 million in initial commission, plus $ 100,000 per year.

The 'upfront' commission requested by the market last week was 4 million dollars.

    Putin's decree allows Moscow to repay Russian government bonds denominated in foreign currencies in rubles if the holders belong to countries that have sanctioned Russia.

But not all the regulations of foreign currency bonds offer this possibility: for these bonds, in the event of payment in rubles, a 'trigger event' could occur, that is an event that determines the default and allows the holders of the CDS to be reimbursed by their counterpart.

    Among the bonds that do not allow payment in rubles there are some bonds maturing on March 16 on which coupons for 117 million dollars must be paid.

(HANDLE).