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Morgan Stanley Says Russian Bond Default Is Most Likely Scenario

  • The odds of Russia making its foreign debt payments is diminishing as bond prices fall, recession in the nation looms and various payment restrictions pile up after the invasion of Ukraine, according to Morgan Stanley.
  • “We see a default as the most likely scenario. In case of default, it is unlikely to be like a normal one, with Venezuela instead perhaps the most relevant comparison,”
  • April 15 is the first potential default date, marking the end of the 30-day grace period on coupon payments due March 16 for dollar-denominated bonds due in 2023 and 2043
  • Russia may not be willing to pay given sanctions imposed by the U.S. and its allies; Plus, there is some uncertainty surrounding whether U.S. banks will be allowed to accept coupon payments from Russia’s Ministry of Finance
  • “Note that as usual a default would not see bonds excluded from the EMBI indices. Index exclusions, barring new rules being put in place given the exceptional circumstances, would only take place due to no secondary trading,” - bbg
MNI London Bureau | +44 020-3983-7894 |
MNI London Bureau | +44 020-3983-7894 |

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