Russia Sanctions Put $41 Billion of Default Insurance at Risk
- Citi warns sanctions could trigger swaps and prevent payouts
- Swaps signal 65% chance Russia will default within five years
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Contracts insuring $41 billion of Russian sovereign debt may be rendered worthless, even as they signal a record likelihood of default.
That’s because international sanctions placed on the country in response to President Vladimir Putin’s invasion of Ukraine may both trigger credit-default swaps and also prevent the underlying bonds from being used for settlement, according to strategists and investors at Citigroup Inc., CreditSights Inc. and Vanguard Asset Management.