A Quirk in Russian Bonds Could Hamper Default Swaps Payout
- Foreign-currency debt could allow local-currency repayments
- Concerns mount as S&P slashes government rating to CCC-
Saint Basil's Cathedral on Red Square in Moscow, Russia.
Source: Bloomberg
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What was once a minor detail of Russia’s international debt terms is now fueling concern about whether insurance would pay out if the nation defaults.
Six of the government’s dollar and euro bonds allow the issuer to service its debts in other currencies, including the ruble, JPMorgan Chase & Co. strategists led by Trang Nguyen wrote in a note to investors. The option of paying back in rubles is what complicates matters.