An employee sorts out rubles at the Hana Bank Counterfeiting and Forgery Response Center in Jung-gu, Seoul on the 15th, amid the growing possibility of a Russian default. 2022.3.15/News 1 © News1 Reporter Hwang Ki-seon (Seoul = News 1) Reporter Hyungki Park = Russias default is imminent, as Bloomberg News reported on the 15th (local time) that Russia will declare a default (default) of 150 billion dollars (about 187 trillion) in the near future. are doing �� What exactly is the current state? : First, Russia has to pay $117 million (about 145.7 billion) in interest on the dollar bond on the 16th. But Russia, which depreciated in dollars and other currencies, said it would pay interest in rubles. Russia is making this statement, but the international financial market does not accept ruble settlement. The ruble is not an internationally accepted currency. As a result, a wave of defaults on a total of $150 billion in debt is expected to begin in earnest. Currently, Russian businesses and governments owe about $150 billion in external debt. If Russia does not pay interest on bonds in dollars, it will be given a grace period until April 15. If the bond interest is paid off after a month, Russia can avoid default. However, it is unlikely that Russia will pay for the dollar, which has been devalued by Western sanctions. Accordingly, the international financial market is expected to regard Russia as de facto default if Russia fails to pay interest in dollars on the 16th. Even if the crisis is over on the 16th, Russia will have to pay interest on bonds three more times in March alone. Russian Bond Interest Payment Timetable – Captured by Bloomberg �� What happens when a default is declared? : If Russia declares a default, foreign currency can no longer be borrowed in foreign capital markets. Russia could borrow money from China, but would have to pay high interest rates. Also, it is questionable how much China will support Russia because it is afraid of sanctions from the West. Experts say that even if the Ukraine war ends soon and peace comes, the credit rating recovery will be slow and Russias borrowing costs will fall very modestly, as markets and rating agencies will remember the crisis for a while. Some are even predicting that Russias economy will return to what it was 30 years ago. �� Are Russian companies defaulting one after another? : If Russia declares default, Russian companies are expected to default one after another. The Debt Situation of the Russian Government and Businesses – Bloomberg Currently, Russias external debt is about 150 billion dollars. Of these, $105 billion is owned by companies. Rather, the exposure of companies is large. “Perhaps a bigger risk is the default of Russian companies, which are more than three times the national debt,” said Hugh Jackson of Capital Economics. �� Is the crisis spread to other countries? : Economists believe that if Russia defaults, the global contagion effect will be modest. Russias debt isnt small, but its because Russia hasnt gotten deep into the Western system. Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki, who is visiting Venice, Italy to attend the G20 Finance Minister and Central Bank Governors Meeting, greets IMF President Kristalina Georgieva at the Arsenale meeting room on the 10th (local time). 2021.7.10/News 1 © News1 Reporter Lee Seong-cheol International Monetary Fund (IMF) managing director Kristalina Georgieva said a default by Russia, which invaded Ukraine on the 13th, is no longer impossible, but will not trigger a global financial crisis. He explained why, “The exposure of the World Banks to Russia is not small at around $120 billion, but it is not systemically relevant.” He predicted that Russias declaration of default could cause famine or food insecurity in parts of Africa as commodity and food prices soared.
