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CDDC Confirms That 'Failure to Pay Event' Occurred on Certain Russian Debt

RUSSIA
  • ISDA's CDDC confirms that Russia have been involved in a 'Failure-to-pay' Credit event, thereby triggering a payout of as much as $3.2bln in swaps contracts.
  • The decision being made here is courtesy of the CDDC - they began deliberations on Friday to discuss a request for clarity on whether credit default swaps on Russian debt should be triggered if Russia pay the principal on sovereign debt, but fail to pay interest on the bonds during any grace period.
  • The request was brought forward by a group of investors who queried bonds that matured on April 4th 2022. There remains some uncertainty about whether the ruling today could constitute a sovereign default or not, but it seems unlikely given the principal had been paid in full.
  • This is a consequential decision - effectively triggering CDS contracts taken out on Russian debt. Unclear whether this 'credit event' constitutes a sovereign default just yet, but this is the first meaningful failure of Russia to meet obligations.
  • CDDC decision in full: https://www.cdsdeterminationscommittees.org/docume...
  • Very light on detail / opinion as you'd expect, but does confirm that a 'Failure to Pay Credit Event' occurred.
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