When the West responded to the Russian military operation in Ukraine with brutal sanctions, everybody said a Russian default was imminent. Russia's foreign exchange earnings would collapse, the ruble would go through the floor, the Russian economy would be brought to its knees and Russia would renege on its sovereign dues.
Nothing like that has happened. Russia's export earnings from oil and gas have boomed as prices have shot up and the West has been unable to avoid buying Russian oil and gas. The Russian ruble has turned out to the best performing currency in recent weeks.
If a Russian default happens, it will not be because Russia does not have the means to repay debt but because sanctions will not allow Russian payments on debt to go through the international system. Until now, servicing of debt payments was exempt from sanctions but the US has now allowed the exemption to expire. Russia has wired a $ 100 million payment that was due but it's not getting cleared. Too bad for the bond holders.
In the case of many of the borrowings from abroad, there is a clause that allows Russia to repay in ruble. For that, bondholders will have to open ruble accounts with Russian banks. That may also not be possible under sanctions. In that event, a Russian default will happen. Perhaps for the first time, a default will happen not because the borrower can't pay but because the lender can't accept the payment! It certainly won't be Russia's fault.
By the way, whatever happened to the financial crash in China that was supposed to happen after the Evergrande default? No crash has happened, the news of the crash has disappeared from the media.
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