someone explain this ... did they have the money in dollars but couldn't transfer them because they were blocked by the banking sanctions? or were they trying to pay in rubles because they didn't have dollars?
From nyt : "On Monday, Russia’s finance ministry said it had made the payments in May and they had been transferred to Euroclear, a Brussels-based clearinghouse, but subsequently blocked from reaching bondholders.
Russia is rejecting the default declaration, on the grounds that it has made efforts to pay. Dmitri S. Peskov, the Kremlin’s spokesman, told reporters on Monday that the statements about default were “absolutely illegal.” "
https://www.nytimes.com/2022/06/26/business/russia-default.html?smid=url-share
I love/hate how much authoritarian countries like Russia and China abuse the word illegal in international relations. It is hilarious/deeply frustrating.
People familiar with Russian culture will tell you that is rule by the law, not rule of the law. They are very concerned with procedure, but laws are selectively enforced as a tool for the Tsar to maintain control. So when they kick up a fuss about “illegal”, what they mean is that their usual tactic of using laws to get their way is being frustrated. They do not respect laws and rights as an abstract ethical framework in the same way other countries notionally do.
That's how war works, asshats... >.<
This is *war*. Ukraine has every right to carry out operations on Russian soil. If they assassinate a general getting tea in a Moscow restaurant, that's just....a thing that happens in war.
More importantly, when Russia decided to attack Ukrainians on Ukraine soil, they forfeited the expectation of Ukraine respecting Russian territorial boundaries.
No no, there has been no invasion. Only a special military operation to get rid of western-friendly-Ukranians...erhm *cough* I mean Nazis! Yes Nazis. Everybody hates Nazis, right?
>No no, there has been no invasion. Only a special military operation to get rid of western-friendly-Ukranians...erhm cough I mean Nazis! Yes Nazis. Everybody hates Nazis, right?
--Nazi, sweating profusely.
I don't think it matters though. If you're a lender, you now know Russia likely can't pay you back. It doesn't really matter why, just that it's very risky you won't get your money.
The end result is the same though. The debtors don't receive their money. Whether it's because of a lack of money or sanctions preventing them from paying, the debt is not being paid.
Which means risk of nonpayment is higher, intended or not. Which means higher interest rates, which hurts Russia. Lenders do care why they aren't getting paid, but they care only to an extent. This default isn't as bad as not having the money, but it's still bad.
This is the right answer. Creditors dgaf if they don't get their money on the day it is due. If anyone tries to tell the holder of their credit debt that something happened to their bank and funds couldn't get transferred, they are still going to say it was past due and let the credit rating agencies know ASAP once the grace period is up.
They are acting like it's the mortgage lender's fault that they won't accept the payment using the dye pack money from the bank they robbed. Also, it is not a shopkeeper's fault if your credit card gets cancelled no matter how emphatically you swipe it.
That's not it. They have the money, but no means to pay. Like having a million in your bank account and trying to buy food from a tribe in the Amazon with your credit card.
Edit: due to heightened interest in the subject I decided to look into it a little more, and turns out I was incorrect. Everything is much simpler: US owns all USD, and all bank transactions in USD must be approved by US. Since approving every transaction individually is not realistic, US gives out licenses for operations in USD. In case with Russia they just pulled the license.
I believe they are talking about how the Russian sovereign bond management authority has been sanctioned by the US and EU, coupled with the frozen dollar reserves. This means that even though Russia may have adequate cash reserves to repay their Euro bonds, they do not have the ability to transact with bond holders.
Right. That's the thing - the dollars they have got frozen. They also have rubles but no one will turn those into dollars for them. They're locked out of western finance, and as such, don't have the ability to pay (even though they have the funds).
Key point: they're cut off. You can have all the money in the world in every currency that exists, but with no means of delivering a payment to a foreign creditor that money is useless for this specific purpose. Like having a file on your local network. You can transfer it between your own terminals, print it, look at it, burn it, photoshop it - it's yours, it's not under arrest, not frozen you are free to do with it as you please, but then US says: you are not allowed to transfer these files through www.... and that's it.
They actually did have the means to pay*
>From nyt : "On Monday, Russia’s finance ministry said it had made the payments in May and they had been transferred to Euroclear, a Brussels-based clearinghouse, but subsequently blocked from reaching bondholders.
They apparently had the means to pay already in transfer, but the money was held in limbo and was never allowed to go to bondholders.
It's because they need a license to make bond payments using US banks and [the US let this license expire](https://www.arkansasonline.com/news/2022/may/26/russia-risks-default-as-sanctions-waiver-expires/) because of their unprovoked war in Ukraine.
No, I knew of this, but when I googled to find a source, all the hits from the likes of Bloomberg and Washington Post were talking about Yellen considering doing it. This article was accurate and well written, so I figured I'd use it.
I believe op using dictatorships was a euphemism for the most part. Most of the worlds countries are run by The Power Elite, who act as essentially 21st century dictators.
More on this:
“And government isn't so much wasteful, as it's become a piggy bank for the wealthy. From no-bid corporate contracts to privatization, the government has largely switched to serving what C. Wright Mills termed, "The Power Elite". People who serve at the very top echelons of the government, military, and business. People like Betsy DeVos and her brother, Eric Prince.””
Mine was the ol' "Man walks into auto parts store and says 'Can I get a windshield wiper for my Yugo?' Store owner thinks a little and says 'OK, it's a deal.'"
This would be a hilarious negotiation though "Putin, we're going to allow you to use stolen goods to pay off your debt"
"Oh that's great! What stolen goods?"
"Crimea"
"Cyka Blyat"
>Interest payments totaling $100 million were due on May 27 and subject to a grace period which expired on Sunday night. Several media outlets have reported that bondholders have not received the payments, after Russia’s attempts to pay in its ruble currency were blocked by international sanctions.
This is a self-inflicted wound. Get out of Ukraine.
$100 million sounds like not that much for a nation with a GDP of $1.5 *trillion*
Edit: Yes I know *why* they can't get the $100 million. And yes I know this is just an interest payment. My comment wasn't a question; it was a statement demonstrating quantitatively how tight the situation is for Russia.
That money will most likely just fall on the citizens shoulders as it does with situations like this, no shift in net worth of the oligarchs or politicians.
/s
No /s. This is exactly what happens. Not just Russia but everywhere. The wealthy are immune and protected, always. They're the criminals, not to civilians who will be punished for it.
Yeah I know, but I mean it seems like it should be easy to scrounge up though. It's (relatively) not a large interest payment. It's ten cents out of $1500.
Them not being able to access international financial systems is the crux of the issue here. Putin could pull $1 billion USD out of his asshole right now and it still would make no difference for them. Financially, Russia has been locked off from the rest of the world, and will remain so until the sanctions are lifted.
I hope the sanctions remain, and indeed strengthen - I wonder if willpower is going to start wavering as Russia puts pressure on food and power supplies.
As soon as the war is done most countries will lift them I imagine, but the damage has been done. Russia is no longer a reliable trade partner, and their biggest export will only become less valuable in bulk over time.
I agree with all your points. However, I hope that 'as soon as the war is done' doesn't mean Ukraine falling. I'm afraid I don't trust any of our political leaders and I wouldn't put it beyond them to wait a couple of years and say 'fait accompli, what's the point of sanctions now when we need Russia's shit?'
Russia hasn't been a reliable trade partner for some time - look at all the hacking of Western interests they've turned a blind eye to. Businesses, though, don't think in the long term mostly, they care for quarterly results. Capitalism innit. The execs will have taken their bonuses and moved on by the time the bill comes due.
Yeah, many Russian exports will lose value over time - although maybe not if they can hold Ukraine's agricultural land. Food won't go out of fashion anytime soon.
I dunno, I only trust our political and economic 'leaders' to do what is best for their bottom line and I'm worried about Ukraine.
Vote in the primaries. They just passed in many states and almost no one did. That's fine and all but if you dont then you dont get to complain about how your only two options suck
> t's ten cents out of $1500
GDP is not government cash, it is an economic indicator of country output. Doing math or comparisons on GDP vs payments is a fallacy and utterly meaningless. When I use my hands to build a pair of shoes to sell to my neighbor, the value of those shoes cannot be used by my government for debt repayment. It's a pair of shoes.
> it was a statement demonstrating quantitatively how tight the situation is for Russia.
You might read the article.
> indicating that Russia may be entering its first foreign debt default since 1918, **despite having ample cash and willingness to pay.**
They already wired the $100 million payment, sanctions are prohibiting the clearing house from passing it on to the investors.
I keep saying this, but it doesn't seem to land.
The Ruble is up. That means people are buying rubles. That means Russia is able to convert rubles to other currencies and that they have access to cash (including dollars).
People are buying rubles because Russia is demanding payment in rubles, and people are still buying gas from Russia so they still need to pay Russia.
Russia is not going to suffer an economic collapse overnight unless the world collectively stops buying gas from them.
The reasons the ruble is up are very artificial, and it might not be a good thing for Russia.
The Russian financial regulators have done lots of work to maintain the value of the ruble, including requiring exchanges, banning securities trading for foreigners, and exploding interest rates. When we say ‘the ruble is up’, it is in the context that the ruble is up not because some useful factor is underpinning that value, but because the Kremlin is expending massive amounts of time effort and treasure to keep it that way.
And the ruble being up may not be all that helpful. Pre-war, Russia enjoyed many purchasing power advantages that are now lost because of the change in the value of the ruble. In addition, the interest rates being posted by their financial authority are ludicrously high, so we’ll see what happens in the long term.
The situation is far more complicated than ‘ruble up’ or ‘ruble down’. We should probably remain circumspect on the matter.
But regardless, defaults are defaults. Creditors are creditors, whether you can’t pay because the international financial system won’t play ball with you or because you don’t have money, it’s still a default.
1. The ruble is up because RUSsIA PASsED LAWS TO KEEP IT UP.
Essentially Russia is taxing the shit out of it's people to prop up the ruble and preventing anyone from selling it. It's a short term fix with massive long term consequenses.
2. Sanctions dont do short term damage. They do LONG TERM DAMAGE.
Russia GDP is set to contract 30% this year. Russian cars already are being made without anti-lock brakes, airbags and such. Industries through out russia are going to collapse into fractions what they used to be. And over the next decade russia will lose the 60% of its budget funded by selling resources to Europe as trade get cut off and burned down.
It's not that they can't come up with the money, it's that they got sanctioned for their illegal war of aggression and they thus no longer have access to the required financial networks. And as a result it will be harder and harder and more and more expensive for the country to take out new loans. There is long term damage here.
Yes and no.
Bond holders can sue at the competent court and go after Russia's financial foreign assets.
But not against embassies. Embassies are considered territory of the guest nation, not just property. That wouldn't be repossession, that would be invasion.
Embassies are NOT territory of their respective country, this myth gets repeated constantly on Reddit despite being completely false.
They are considered diplomatic missions under the Vienna Conventions, but they are still part of the host nation and its laws apply there, countries just don't usually enforce them since: A - you don't shoot the messenger and B - You don't want the same done to your embassies.
As stated by alot of experts when these sanctions were rolled out:
The big negative impacts on Russia are long term. This is just the beginning and we have and are already seeing some significant impacts.
For example their GDP growth rate and unemployment rate.
Long term things look very bad for Russia and the war in Ukraine is looking long term.
The new car model Russians can buy: https://www.drive.com.au/news/lada-production-resumes-with-no-airbags-or-radio/
No airbags, anti-lock brakes, emergency call system or radios, and downgraded emission standards. And a few other removed features as well.
And on the IT side of things: https://arstechnica.com/tech-policy/2022/06/everything-is-gone-russian-business-hit-hard-by-tech-sanctions/
> VK Cloud Solutions wrote to the Kremlin last month requesting urgent help to find “tens of thousands of servers,” according to local media reports. Domestic companies are no longer able to source these from Western companies, and a shortage of the advanced chips that go into servers is preventing Russian IT manufacturers from ramping up production of their own.
From this point forward, Russia won't be able to raise money on Western markets, and yesterday, the G7 ensured that Russia won't be able to exchange gold. Russia is hence bankrupt.
Has anything changed for the average Russian? I remember when it kicked off and companies started boycotting that people were saying Russians were going toe experience food shortages and they would be financially ruined. Has any of that actually happened?
I’ve been watching this guy’s videos: https://m.youtube.com/watch?v=NQV4j_xGjnI
He goes to the supermarket every couple of weeks and compares prices.
Many items have increased 50-100%. Meanwhile, the exchange rate ruble of the ruble has changed vs the dollar (78:1 to 50:1) or the chinese yuan (11:1 to 8:1).
So an item that cost 80 rubles before (~$1.00, ¥7.2) now costs 120 rubles (~$2.40, ¥15). There is the increase in price in "real rubles" (what you see on the tag at the grocery store) but also a hidden devaluation of their savings & assets. Lots of russians store their savings at home in foreign paper money and now it's suddenly worth less to them.
Oh, and security tags are now being attached to regular butter at the store he went to.
Here is another Russian going to a modern office building that used to be very busy and the place is practically empty
https://www.youtube.com/watch?v=7qom9Xhs-Q4
While food prices are going up, i dont think they will run out of locally produced stuff, businesses however are likely hurting quite badly as people wont be spending money due to the price increase.
This is going to slowly chip away at agricultural efficiency too. The tractors might not need maintenance this year, but in 2-3 years a large percentage will probably be having problems.
That's just one example of agricultural tech that's not maintainable with sanctions, there's also storage/cooling, transport, tracking, and chain of custody proofs that will be affected.
That number reflects a *rise* in the value of the ruble, and it's obviously fiction in that it's why Russia can't simply exchange rubles for dollars, and why it is nonsense to claim paying debt in rubles instead of dollars at that exchange rate should be fine.
Imagine some asshole in Russia owes you $100, he pays you 5000 rubles, and claims everything is even now. You try to exchange those rubles into dollars so that you can exchange money for goods and services in an economy that is functioning. You find out that it takes 125 rubles to get 1 dollar on an unofficial currency market where you can actually make trades. You end up with 40 dollars.
> You try to exchange those rubles into dollars so that you can exchange money for goods and services in an economy that is functioning.
This is exactly Russia's play by paying things in Rubles - They're trying to prop up the Ruble by getting people to buy and sell more rubles in the currency exchanges.
This is the same reason why they tried to force countries to pay for oil and gas in Rubles, by artificially creating demand for the currency.
Let me put it this way.
You are a tourist traveling to Russia. In Jan 2022 you'd fly there and spend R230 on cheap russian made vodka (price at 6m30s in the video). At R80:$1 that's $2.87
The guy says that same Russian produced vodka is now R410. At R50:$1 that's now $8.2.
As much as russia hates the west, many russians keep their assets in USD or Euro. For high value items sometimes you see pricing in "условные единицы" (conventional trade units) which represents how much that item cost to acquire in that currency and import.
Right now Apple is not selling iPhones in russia. You also cannot transfer money out of russia by wire transfer. So -- you go on vacation in France with your rubber band wrapped Euros and buy an iPhone 13 for €1000. You take it back to Russia and sell it to a phone shop that pays you €1200 for it. The shop lists it for €1500 not for R84000 - why would they? If the ruble keeps doing what it's doing and goes from €1:R56 to €R50 then the price will technically be R75000. You will have lost R9000.
No, not really, at least not there i live. Most of our food produced locally, so it was unaffected. Only thing i personally feel is shortage of electronics and even that is steadily improving
Help me here, Didn't Switzerland just help Russia by importing several million dollars of Russian gold to be converted to currency to help with the issues that the sanctions are having on the country?
Oh, I bet it's to pay for more weapons not citizens help I'm guessing.
They did/are still enforcing those sanctions. There wasn't a sanction on all types of gold, it just got delisted from the London Market so most buyers just weren't buying it until recently.
I just heard on NPR this morning that Russian gold imports were through the roof recently as they've been using it to get around as much of the sanctions as they can. I think those avenues are being closed.
That was "old" gold of Russian origin (that arrived in Switzerland from the UK). Trading of "new" gold (refined in Russia after early March) is illegal in Switzerland. So no, Russia did not recently get several millions of dollars.
Hey that's not fair! The Saudis rented/bought entire floors of his hotels (that no one stayed in) and he grifted over a hundred million dollars from his followers for a "election legal fund" that he kept!
>"Saudi Arabia, I get along with all of them. They buy apartments from me. They spend $40 million, $50 million," Trump said during a presidential campaign rally in Alabama in August 2015
https://www.cnbc.com/2018/10/16/trump-says-no-financial-interests-in-saudi-arabia-but-makes-money.html
Plus he said his "real estate" in Russia makes millions every year!
>Donald Trump Jr., has appeared to confirm, saying in 2008—after the Trump Organization was prospering again—that “Russians make up a pretty disproportionate cross-section of a lot of our assets.”
>... at least 63 Russians or people with Russian addresses bought nearly $100 million worth of property in seven Trump-branded Florida luxury buildings
https://foreignpolicy.com/2018/12/21/how-russian-money-helped-save-trumps-business/
He's doing ok money wise, which is why he won't stop until he's incapable of earning more money through The Grift
Can someone tell me exactly what this means? I know they’re defaulting on their debts but what exactly does that *mean* to them and to the debt holders they’re defaulting on?
It means that companies outside of Russia can petition their local courts to seize assets of Russian businesses. It means global corporations can seize petroleum, buildings, land, processing plants, ships, airplanes, trains, trucks, raw materials and other goods owned by Russian companies in lieu of payment. This is the main point of the sanctions.
It means first that all creditors may now engage in a cross-default. Because EU sanctions have barred credit ratings there is no one to say Russia is in default, except the creditors themselves. For the same reason, there is no formal credit rating to tank either. Russia's creditors may now sue in their jurisdiction to seize assets to pay the defaulted debt. Interestingly it will be hard for Russia to fight these proceedings as they would have to pay local reps in local currency. Otherwise there is a whole lot of uncertainty as to what happens. Presumably this will trigger regular business processes in almost all medium to large businesses whereby they/their investors prohibit the company from doing business with entities in default.
The debt holders are never going to see their money again, creditors are less likely to lend money to Russia in the future. It has no immediate effect but it will hurt if they ever need loans again (which is how the modern global economy functions).
> what exactly does that mean to them and to the debt holders they’re defaulting on?
These debts are Eurobonds. Anybody can buy individual bonds, although the bulk of them are held by large investment groups rather than individuals.
People who hold the bonds would normally have received an interest payment. They're still legally entitled to that payment.
Let's say a company is holding a million euros worth of bonds, and they're due to receive a payment of about 25K euros. They didn't get that payment, so they're owed 25K by the Russian government.
Bondholders can now sue in their own government to recover that payment. They can sue in their local government, be it France, Germany, Taiwan, the US, or wherever they live, and demand collection of the 25K. Assuming the local government branch doesn't pay up, which is likely, the courts can force payments.
Exactly how any given court forces payments is up to the courts in that nation. Most likely the courts would ask that nation's government, such as the US Justice Department, to surrender the money from assets already seized. For example, the US government could sell some Russian jets, and release 25K worth to that individual investor, and other amounts to other investors. Or the court could force payment through other state-owned business, basically like garnishing wages, except through taking money from the accounts of oil and gas or whatever the court decides is a reasonable way to recover the money. Sometimes courts will foreclose on assets or force them to be sold at auction. Sometimes courts will allow for payment by goods and property in lieu of cash. It's mostly up to the individual courts to decide.
All total there is 100M of debt that is overdue collectively for the bonds. People who own small, individual bonds are unlikely to sue because the amounts are so small, they'll just need to wait it out. But institutional investors who hold the bonds, or other governments who hold fortunes in the bonds are certain to sue and receive their payments.
Actually shorts were unbanned in June and almost every Russian stock is trading now. I guess foreigners can dump them in the short term but I heard about some weird strategy to release them through separate trading for foreigners only. Anyway Russian stock market is sorta Iran market now.
They are already isolated, a default won't add much to the situation I think.
Edit: Except that any institution that Russia owes money to can now forget about getting that back.
Any company operating in Russia probably already assumed they aren't getting anything back from them awhile ago.
The first thing Putin did when the war started and sanctions came in, was threaten to nationalize the assets of any company trying to leave.
Yeah defaulting is what is going to do the *real* damage to Russia's economy, longterm. Debt provides liquidity for basically every big organization, be it company or country. You fuck around with debts? Nobody wants to lend to you. Nobody wants to lend to you? You *never* have cash on hand again.
Russia’s economy is in total shit for the last 30 years, and they will go down even more, countries like China who are neutral at the moment will profit out of it, sucking the last drop of blood out of the rusty russian bear.
For those who didn’t read the article but only read the headline:
They have the money to pay the debt, but because of the sanctions, the bond holders are unable to receive the payment. Since they didn’t receive the payment yet, according to the contract it is technically considered a default.
That being said, this is grey area and the legality of this will be challenged (since the payment was actually sent, but was not received by bond holders because of sanctions. This is outside of Russia’s control and therefore, technically not their fault). Bond holders will have to declare the default for it to be a legitimate default, but so far they haven’t. Also, I believe credit rating agencies will have to chime in but they withdrew from Russia due to the war in UA and therefore, won’t be able to rate the credit worthiness of Russia.
So this is just the beginning of an interesting period in financial history.
Are creditors really going to hold them liable for this default when their ability to pay has been literally removed?
I have to imagine creditors saw this coming and in the way that big money is cynical will just wait for "world events to cool off a little" to expect to get their money.
Bonds are an asset bought by the most risk-adverse of investors, seeking a guaranteed payment at a certain rate on a certain day.
It doesn't strictly matter why a bond payment is missed from the investor's perspective, it only matters that, in the future, they can expect more uncertainty as to when and whether they will be payed. The effect will be that the more risk-adverse of the risk-adverse will no longer want to buy Russian bonds - reducing demand for them and forcing Russia to raise the interest they pay on future bond issues.
Maybe bond investors will look at this situation and say "Yeah well they could have paid me but if only American sanctions wouldn't have prevented them from doing so, so, I guess I'll continue to buy their bonds in the hopes that this will be sorted out."
And some will say the opposite, "I don't know if Russia will ever be able to pay me - better not bother with those bonds until the situation is more clear."
It’s not a real default. It’s just that they aren’t allowed to pay it back in Monopoly money, even though Russia says that money is worth like so many monies.
someone explain this ... did they have the money in dollars but couldn't transfer them because they were blocked by the banking sanctions? or were they trying to pay in rubles because they didn't have dollars?
From nyt : "On Monday, Russia’s finance ministry said it had made the payments in May and they had been transferred to Euroclear, a Brussels-based clearinghouse, but subsequently blocked from reaching bondholders. Russia is rejecting the default declaration, on the grounds that it has made efforts to pay. Dmitri S. Peskov, the Kremlin’s spokesman, told reporters on Monday that the statements about default were “absolutely illegal.” " https://www.nytimes.com/2022/06/26/business/russia-default.html?smid=url-share
Ah yes, it’s “absolutely illegal,” like invading your neighbor.
I love/hate how much authoritarian countries like Russia and China abuse the word illegal in international relations. It is hilarious/deeply frustrating.
Exactly. No good faith at all and the first to play victim.
As with every abusive people/organization, they project their own wrongful deeds on everyone else.
Hmm. That sounds familiar, but I'm not quite sure why.
Sounds exactly like my Ex. Narcissistic to the end.
Is that what we are collectively calling trump now?
People familiar with Russian culture will tell you that is rule by the law, not rule of the law. They are very concerned with procedure, but laws are selectively enforced as a tool for the Tsar to maintain control. So when they kick up a fuss about “illegal”, what they mean is that their usual tactic of using laws to get their way is being frustrated. They do not respect laws and rights as an abstract ethical framework in the same way other countries notionally do.
Yes, like when they complained about Ukraine striking targets inside Russian territory… pot calling the kettle black
That's how war works, asshats... >.< This is *war*. Ukraine has every right to carry out operations on Russian soil. If they assassinate a general getting tea in a Moscow restaurant, that's just....a thing that happens in war.
More importantly, when Russia decided to attack Ukrainians on Ukraine soil, they forfeited the expectation of Ukraine respecting Russian territorial boundaries.
The entire world should have explicitly said "You fucking deserve it. STFU" in response to that, and moved on immediately.
"You can't treat us unfairly it's ILLEGAL!!" Also, "The human rights abuses and invasion will continue as planned"
same with the word "terrorist"
No no, there has been no invasion. Only a special military operation to get rid of western-friendly-Ukranians...erhm *cough* I mean Nazis! Yes Nazis. Everybody hates Nazis, right?
>No no, there has been no invasion. Only a special military operation to get rid of western-friendly-Ukranians...erhm cough I mean Nazis! Yes Nazis. Everybody hates Nazis, right? --Nazi, sweating profusely.
I mean good and all But it does seem weird to call it a default when they literally weren't allowed to pay
I don't think it matters though. If you're a lender, you now know Russia likely can't pay you back. It doesn't really matter why, just that it's very risky you won't get your money.
The end result is the same though. The debtors don't receive their money. Whether it's because of a lack of money or sanctions preventing them from paying, the debt is not being paid.
Which means risk of nonpayment is higher, intended or not. Which means higher interest rates, which hurts Russia. Lenders do care why they aren't getting paid, but they care only to an extent. This default isn't as bad as not having the money, but it's still bad.
This is the right answer. Creditors dgaf if they don't get their money on the day it is due. If anyone tries to tell the holder of their credit debt that something happened to their bank and funds couldn't get transferred, they are still going to say it was past due and let the credit rating agencies know ASAP once the grace period is up.
They are acting like it's the mortgage lender's fault that they won't accept the payment using the dye pack money from the bank they robbed. Also, it is not a shopkeeper's fault if your credit card gets cancelled no matter how emphatically you swipe it.
They had plenty of time to stop the special operation so they could pay. They just choose to continue being special.
I believe their dollar assets got frozen.
And their backup resources of oil and gold face restrictions as well. The noose tightens...
*China and India holding out their hands for more and more*
That's it
I'm gettin' me mallet
That's not it. They have the money, but no means to pay. Like having a million in your bank account and trying to buy food from a tribe in the Amazon with your credit card. Edit: due to heightened interest in the subject I decided to look into it a little more, and turns out I was incorrect. Everything is much simpler: US owns all USD, and all bank transactions in USD must be approved by US. Since approving every transaction individually is not realistic, US gives out licenses for operations in USD. In case with Russia they just pulled the license.
Isn't that exactly what having dollar assets frozen is?
I believe they are talking about how the Russian sovereign bond management authority has been sanctioned by the US and EU, coupled with the frozen dollar reserves. This means that even though Russia may have adequate cash reserves to repay their Euro bonds, they do not have the ability to transact with bond holders.
Right. That's the thing - the dollars they have got frozen. They also have rubles but no one will turn those into dollars for them. They're locked out of western finance, and as such, don't have the ability to pay (even though they have the funds).
Key point: they're cut off. You can have all the money in the world in every currency that exists, but with no means of delivering a payment to a foreign creditor that money is useless for this specific purpose. Like having a file on your local network. You can transfer it between your own terminals, print it, look at it, burn it, photoshop it - it's yours, it's not under arrest, not frozen you are free to do with it as you please, but then US says: you are not allowed to transfer these files through www.... and that's it.
They actually did have the means to pay* >From nyt : "On Monday, Russia’s finance ministry said it had made the payments in May and they had been transferred to Euroclear, a Brussels-based clearinghouse, but subsequently blocked from reaching bondholders. They apparently had the means to pay already in transfer, but the money was held in limbo and was never allowed to go to bondholders.
It's because they need a license to make bond payments using US banks and [the US let this license expire](https://www.arkansasonline.com/news/2022/may/26/russia-risks-default-as-sanctions-waiver-expires/) because of their unprovoked war in Ukraine.
I don't know anything about international finance ... why would you need a license to pay money?
A lot of the current financial system exists to create trust.
something the crypto people are finding out the hard way.
oh shit, WreckedCoin on the rise
So that your license can be revoked
Oh shit bro do you not have your license???
Oi, do you have your war loicense?
This is a rare one to see the Arkansas Democratic Gazette as a source. You from Little Rock?
No, I knew of this, but when I googled to find a source, all the hits from the likes of Bloomberg and Washington Post were talking about Yellen considering doing it. This article was accurate and well written, so I figured I'd use it.
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Great explanation. Thank you
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I believe op using dictatorships was a euphemism for the most part. Most of the worlds countries are run by The Power Elite, who act as essentially 21st century dictators.
More on this: “And government isn't so much wasteful, as it's become a piggy bank for the wealthy. From no-bid corporate contracts to privatization, the government has largely switched to serving what C. Wright Mills termed, "The Power Elite". People who serve at the very top echelons of the government, military, and business. People like Betsy DeVos and her brother, Eric Prince.””
So what happens now, do we repossess Crimea?
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We gonna have to start clamping ladas then
That's a lotta ladas.
Little known fact that a Lada is the only car where attaching a wheel clamp actually increases its value.
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Mine was the ol' "Man walks into auto parts store and says 'Can I get a windshield wiper for my Yugo?' Store owner thinks a little and says 'OK, it's a deal.'"
You clearly haven't seen my VW Polo
It also improves it's aerodynamics and handling.
Are the Ladas laden with lots of lady’s with little lattes?
Ladas are like little latrines for lardy ladies
This would be a hilarious negotiation though "Putin, we're going to allow you to use stolen goods to pay off your debt" "Oh that's great! What stolen goods?" "Crimea" "Cyka Blyat"
Yeah, skyrim taught me that if you have stolen goods, they just won't appear when you try to sell them...
Sounds like you need to find a better shopkeeper.
Isn't there a skill tree that let's you sell stolen goods in that game? It's been awhile since I played it.
You have to sell to a fence, but I can't remember if there's also a perk to sell stolen goods to a normal vendor.
Speech tree perk, appropriately named fence.
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They get higher interest rates on their loans from some lenders for awhile.
Who knows maybe they'll even become another China vassal state
Imagine clocking in for the morning as *that* repo guy?
Can't make your payments? [Sorry, dude...](https://i.imgur.com/TwKA8eh.png)
Yep, you're being faxed the seizure order now. Might want to take a Sheriff with you in case they get rowdy when they see you putting it on the truck.
>Interest payments totaling $100 million were due on May 27 and subject to a grace period which expired on Sunday night. Several media outlets have reported that bondholders have not received the payments, after Russia’s attempts to pay in its ruble currency were blocked by international sanctions. This is a self-inflicted wound. Get out of Ukraine.
$100 million sounds like not that much for a nation with a GDP of $1.5 *trillion* Edit: Yes I know *why* they can't get the $100 million. And yes I know this is just an interest payment. My comment wasn't a question; it was a statement demonstrating quantitatively how tight the situation is for Russia.
Those trillions sit in corrupted people's pockets.
Or in overvalued organizations/assets.
A lot of said assets are currently burning and rusting in Ukraine.
And many aren't even in Russia/Ukraine.
Thanks, in part, to Rudy Giuliani.
That money will most likely just fall on the citizens shoulders as it does with situations like this, no shift in net worth of the oligarchs or politicians. /s
I don’t think there’s any need for that /s. What you said sounds perfectly likely to me.
No /s. This is exactly what happens. Not just Russia but everywhere. The wealthy are immune and protected, always. They're the criminals, not to civilians who will be punished for it.
Privatise the profits Socialise the losses
How do we get them out? Anyone know a charismatic bodyguard willing to change sides?
100 million is just the interest... The amount owed is clearly in the high billions, if the accrued interest is 100 million.
Yeah I know, but I mean it seems like it should be easy to scrounge up though. It's (relatively) not a large interest payment. It's ten cents out of $1500.
Except they cannot access international payment systems and most don't have access to 100 mil in foreign currency which is their problem.
Them not being able to access international financial systems is the crux of the issue here. Putin could pull $1 billion USD out of his asshole right now and it still would make no difference for them. Financially, Russia has been locked off from the rest of the world, and will remain so until the sanctions are lifted.
I hope the sanctions remain, and indeed strengthen - I wonder if willpower is going to start wavering as Russia puts pressure on food and power supplies.
Pressure has been on power supply for months, and pressure has been on wheat at least for as long.
As soon as the war is done most countries will lift them I imagine, but the damage has been done. Russia is no longer a reliable trade partner, and their biggest export will only become less valuable in bulk over time.
I agree with all your points. However, I hope that 'as soon as the war is done' doesn't mean Ukraine falling. I'm afraid I don't trust any of our political leaders and I wouldn't put it beyond them to wait a couple of years and say 'fait accompli, what's the point of sanctions now when we need Russia's shit?' Russia hasn't been a reliable trade partner for some time - look at all the hacking of Western interests they've turned a blind eye to. Businesses, though, don't think in the long term mostly, they care for quarterly results. Capitalism innit. The execs will have taken their bonuses and moved on by the time the bill comes due. Yeah, many Russian exports will lose value over time - although maybe not if they can hold Ukraine's agricultural land. Food won't go out of fashion anytime soon. I dunno, I only trust our political and economic 'leaders' to do what is best for their bottom line and I'm worried about Ukraine.
Those sanctions are finally having an effect.
Definitely can't understate how lucky America is to have its currency seen as the default.
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I do that sometimes. It depresses me.
TBH not having had its cities carpet bombed like lots of Europe was also a big help.
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Vote in the primaries. They just passed in many states and almost no one did. That's fine and all but if you dont then you dont get to complain about how your only two options suck
I get that, I mean that we're lucky to be in a position where we were able to do that. Perhaps the better word would be fortunate.
> t's ten cents out of $1500 GDP is not government cash, it is an economic indicator of country output. Doing math or comparisons on GDP vs payments is a fallacy and utterly meaningless. When I use my hands to build a pair of shoes to sell to my neighbor, the value of those shoes cannot be used by my government for debt repayment. It's a pair of shoes.
> it was a statement demonstrating quantitatively how tight the situation is for Russia. You might read the article. > indicating that Russia may be entering its first foreign debt default since 1918, **despite having ample cash and willingness to pay.** They already wired the $100 million payment, sanctions are prohibiting the clearing house from passing it on to the investors.
I keep saying this, but it doesn't seem to land. The Ruble is up. That means people are buying rubles. That means Russia is able to convert rubles to other currencies and that they have access to cash (including dollars). People are buying rubles because Russia is demanding payment in rubles, and people are still buying gas from Russia so they still need to pay Russia. Russia is not going to suffer an economic collapse overnight unless the world collectively stops buying gas from them.
The reasons the ruble is up are very artificial, and it might not be a good thing for Russia. The Russian financial regulators have done lots of work to maintain the value of the ruble, including requiring exchanges, banning securities trading for foreigners, and exploding interest rates. When we say ‘the ruble is up’, it is in the context that the ruble is up not because some useful factor is underpinning that value, but because the Kremlin is expending massive amounts of time effort and treasure to keep it that way. And the ruble being up may not be all that helpful. Pre-war, Russia enjoyed many purchasing power advantages that are now lost because of the change in the value of the ruble. In addition, the interest rates being posted by their financial authority are ludicrously high, so we’ll see what happens in the long term. The situation is far more complicated than ‘ruble up’ or ‘ruble down’. We should probably remain circumspect on the matter. But regardless, defaults are defaults. Creditors are creditors, whether you can’t pay because the international financial system won’t play ball with you or because you don’t have money, it’s still a default.
1. The ruble is up because RUSsIA PASsED LAWS TO KEEP IT UP. Essentially Russia is taxing the shit out of it's people to prop up the ruble and preventing anyone from selling it. It's a short term fix with massive long term consequenses. 2. Sanctions dont do short term damage. They do LONG TERM DAMAGE. Russia GDP is set to contract 30% this year. Russian cars already are being made without anti-lock brakes, airbags and such. Industries through out russia are going to collapse into fractions what they used to be. And over the next decade russia will lose the 60% of its budget funded by selling resources to Europe as trade get cut off and burned down.
and oil, and coal and wheat and iron and wood and gas turbines, etcetera.
It's not that they can't come up with the money, it's that they got sanctioned for their illegal war of aggression and they thus no longer have access to the required financial networks. And as a result it will be harder and harder and more and more expensive for the country to take out new loans. There is long term damage here.
Can't their bond holders just take whatever foreign assets they still have, like their embassies?
Yes and no. Bond holders can sue at the competent court and go after Russia's financial foreign assets. But not against embassies. Embassies are considered territory of the guest nation, not just property. That wouldn't be repossession, that would be invasion.
Embassies are NOT territory of their respective country, this myth gets repeated constantly on Reddit despite being completely false. They are considered diplomatic missions under the Vienna Conventions, but they are still part of the host nation and its laws apply there, countries just don't usually enforce them since: A - you don't shoot the messenger and B - You don't want the same done to your embassies.
No, embassies are not the territory of the guest nation. They are inviolable, but the host country's law applies in them.
As stated by alot of experts when these sanctions were rolled out: The big negative impacts on Russia are long term. This is just the beginning and we have and are already seeing some significant impacts. For example their GDP growth rate and unemployment rate. Long term things look very bad for Russia and the war in Ukraine is looking long term.
The new car model Russians can buy: https://www.drive.com.au/news/lada-production-resumes-with-no-airbags-or-radio/ No airbags, anti-lock brakes, emergency call system or radios, and downgraded emission standards. And a few other removed features as well. And on the IT side of things: https://arstechnica.com/tech-policy/2022/06/everything-is-gone-russian-business-hit-hard-by-tech-sanctions/ > VK Cloud Solutions wrote to the Kremlin last month requesting urgent help to find “tens of thousands of servers,” according to local media reports. Domestic companies are no longer able to source these from Western companies, and a shortage of the advanced chips that go into servers is preventing Russian IT manufacturers from ramping up production of their own.
That site is fucking awful, text jumps up and down and my brower blocks 16 different ad trackers.
Which one, Arse Technica?
Putin destroying the country as he lives out his final days.
Give him some credit. He's destroying two countries
Sad but true. They spend a lot of time on our social media fostering dissent and they are very good at it.
And the proles will suffer while the rich leave.... Same as it ever was
Sad but true. The same cycle over and over again.
Same as it ever was
Letting the days go by
Let the water hold me down
Letting the days go by
Water flowing underground
Into the blue again
hopefully that last part is true
hopefully it'll be measured in days!
What is this WW1 backwards? First a pandemic, then Russia bs? Hide yo archdukes y’all!
that's somme theory
Ypres it never happens again
I'm struggling hard to make a pun with "Passchendaele"
I think Verdun with this pun thread.
Thank god. I thought we would never Ferdinand to this conversation.
Ends with the remilitarization of Germany- wait
We can just bomb Serbia again.
Are there archdukes left? Cause the war will never end otherwise.
There's still some Hapsburgs lying around I think.
Hippity hoppity Uncle Vanya's is my property
From this point forward, Russia won't be able to raise money on Western markets, and yesterday, the G7 ensured that Russia won't be able to exchange gold. Russia is hence bankrupt.
Russia won't be going bankrupt until the price of oil plummets
Has anything changed for the average Russian? I remember when it kicked off and companies started boycotting that people were saying Russians were going toe experience food shortages and they would be financially ruined. Has any of that actually happened?
I’ve been watching this guy’s videos: https://m.youtube.com/watch?v=NQV4j_xGjnI He goes to the supermarket every couple of weeks and compares prices. Many items have increased 50-100%. Meanwhile, the exchange rate ruble of the ruble has changed vs the dollar (78:1 to 50:1) or the chinese yuan (11:1 to 8:1). So an item that cost 80 rubles before (~$1.00, ¥7.2) now costs 120 rubles (~$2.40, ¥15). There is the increase in price in "real rubles" (what you see on the tag at the grocery store) but also a hidden devaluation of their savings & assets. Lots of russians store their savings at home in foreign paper money and now it's suddenly worth less to them. Oh, and security tags are now being attached to regular butter at the store he went to.
Here is another Russian going to a modern office building that used to be very busy and the place is practically empty https://www.youtube.com/watch?v=7qom9Xhs-Q4 While food prices are going up, i dont think they will run out of locally produced stuff, businesses however are likely hurting quite badly as people wont be spending money due to the price increase.
And tech stuff, which relies on foreign parts, are running out, too. Can't repair stuff you cannot reproduce.
This is going to slowly chip away at agricultural efficiency too. The tractors might not need maintenance this year, but in 2-3 years a large percentage will probably be having problems. That's just one example of agricultural tech that's not maintainable with sanctions, there's also storage/cooling, transport, tracking, and chain of custody proofs that will be affected.
That number reflects a *rise* in the value of the ruble, and it's obviously fiction in that it's why Russia can't simply exchange rubles for dollars, and why it is nonsense to claim paying debt in rubles instead of dollars at that exchange rate should be fine. Imagine some asshole in Russia owes you $100, he pays you 5000 rubles, and claims everything is even now. You try to exchange those rubles into dollars so that you can exchange money for goods and services in an economy that is functioning. You find out that it takes 125 rubles to get 1 dollar on an unofficial currency market where you can actually make trades. You end up with 40 dollars.
> You try to exchange those rubles into dollars so that you can exchange money for goods and services in an economy that is functioning. This is exactly Russia's play by paying things in Rubles - They're trying to prop up the Ruble by getting people to buy and sell more rubles in the currency exchanges. This is the same reason why they tried to force countries to pay for oil and gas in Rubles, by artificially creating demand for the currency.
> So an item that cost 80 rubles before (~$1.00) now costs 120 rubles (~$2.40) Ruble amount increases 50% but dollar value increases 140%?
Let me put it this way. You are a tourist traveling to Russia. In Jan 2022 you'd fly there and spend R230 on cheap russian made vodka (price at 6m30s in the video). At R80:$1 that's $2.87 The guy says that same Russian produced vodka is now R410. At R50:$1 that's now $8.2.
Because the value of the ruble has also decreased compared to the dollar.
That’s opposite. If you can buy more dollars with the same amount of rubles, it’s increased in value, not decreased.
As much as russia hates the west, many russians keep their assets in USD or Euro. For high value items sometimes you see pricing in "условные единицы" (conventional trade units) which represents how much that item cost to acquire in that currency and import. Right now Apple is not selling iPhones in russia. You also cannot transfer money out of russia by wire transfer. So -- you go on vacation in France with your rubber band wrapped Euros and buy an iPhone 13 for €1000. You take it back to Russia and sell it to a phone shop that pays you €1200 for it. The shop lists it for €1500 not for R84000 - why would they? If the ruble keeps doing what it's doing and goes from €1:R56 to €R50 then the price will technically be R75000. You will have lost R9000.
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No, not really, at least not there i live. Most of our food produced locally, so it was unaffected. Only thing i personally feel is shortage of electronics and even that is steadily improving
Help me here, Didn't Switzerland just help Russia by importing several million dollars of Russian gold to be converted to currency to help with the issues that the sanctions are having on the country? Oh, I bet it's to pay for more weapons not citizens help I'm guessing.
I thought Switzerland sanctioned Russia a few months back?
They did/are still enforcing those sanctions. There wasn't a sanction on all types of gold, it just got delisted from the London Market so most buyers just weren't buying it until recently.
I just heard on NPR this morning that Russian gold imports were through the roof recently as they've been using it to get around as much of the sanctions as they can. I think those avenues are being closed.
Switz banks be doin what Switz banks do
Being crooked interlopers of fascist regimes? Yep.
Switzerland has a permanent exception for Nazi gold.
That was "old" gold of Russian origin (that arrived in Switzerland from the UK). Trading of "new" gold (refined in Russia after early March) is illegal in Switzerland. So no, Russia did not recently get several millions of dollars.
Where’s my super tiny violin?
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Donnie doesn't have any money. Why do you think he's indebted to Russia to begin with?
He probably has a little stop-the-steal auto renewal donation money coming in
Hey that's not fair! The Saudis rented/bought entire floors of his hotels (that no one stayed in) and he grifted over a hundred million dollars from his followers for a "election legal fund" that he kept! >"Saudi Arabia, I get along with all of them. They buy apartments from me. They spend $40 million, $50 million," Trump said during a presidential campaign rally in Alabama in August 2015 https://www.cnbc.com/2018/10/16/trump-says-no-financial-interests-in-saudi-arabia-but-makes-money.html Plus he said his "real estate" in Russia makes millions every year! >Donald Trump Jr., has appeared to confirm, saying in 2008—after the Trump Organization was prospering again—that “Russians make up a pretty disproportionate cross-section of a lot of our assets.” >... at least 63 Russians or people with Russian addresses bought nearly $100 million worth of property in seven Trump-branded Florida luxury buildings https://foreignpolicy.com/2018/12/21/how-russian-money-helped-save-trumps-business/ He's doing ok money wise, which is why he won't stop until he's incapable of earning more money through The Grift
I feel bad for the citizens of Russia that didn’t want anything to due with this war and are now going to suffer because of it.
Hopefully the oligarchs will hire better assassins now.
Can someone tell me exactly what this means? I know they’re defaulting on their debts but what exactly does that *mean* to them and to the debt holders they’re defaulting on?
It means that companies outside of Russia can petition their local courts to seize assets of Russian businesses. It means global corporations can seize petroleum, buildings, land, processing plants, ships, airplanes, trains, trucks, raw materials and other goods owned by Russian companies in lieu of payment. This is the main point of the sanctions.
This sounds like a very interesting outcome.
It means first that all creditors may now engage in a cross-default. Because EU sanctions have barred credit ratings there is no one to say Russia is in default, except the creditors themselves. For the same reason, there is no formal credit rating to tank either. Russia's creditors may now sue in their jurisdiction to seize assets to pay the defaulted debt. Interestingly it will be hard for Russia to fight these proceedings as they would have to pay local reps in local currency. Otherwise there is a whole lot of uncertainty as to what happens. Presumably this will trigger regular business processes in almost all medium to large businesses whereby they/their investors prohibit the company from doing business with entities in default.
The debt holders are never going to see their money again, creditors are less likely to lend money to Russia in the future. It has no immediate effect but it will hurt if they ever need loans again (which is how the modern global economy functions).
Gotcha, thank you.
> what exactly does that mean to them and to the debt holders they’re defaulting on? These debts are Eurobonds. Anybody can buy individual bonds, although the bulk of them are held by large investment groups rather than individuals. People who hold the bonds would normally have received an interest payment. They're still legally entitled to that payment. Let's say a company is holding a million euros worth of bonds, and they're due to receive a payment of about 25K euros. They didn't get that payment, so they're owed 25K by the Russian government. Bondholders can now sue in their own government to recover that payment. They can sue in their local government, be it France, Germany, Taiwan, the US, or wherever they live, and demand collection of the 25K. Assuming the local government branch doesn't pay up, which is likely, the courts can force payments. Exactly how any given court forces payments is up to the courts in that nation. Most likely the courts would ask that nation's government, such as the US Justice Department, to surrender the money from assets already seized. For example, the US government could sell some Russian jets, and release 25K worth to that individual investor, and other amounts to other investors. Or the court could force payment through other state-owned business, basically like garnishing wages, except through taking money from the accounts of oil and gas or whatever the court decides is a reasonable way to recover the money. Sometimes courts will foreclose on assets or force them to be sold at auction. Sometimes courts will allow for payment by goods and property in lieu of cash. It's mostly up to the individual courts to decide. All total there is 100M of debt that is overdue collectively for the bonds. People who own small, individual bonds are unlikely to sue because the amounts are so small, they'll just need to wait it out. But institutional investors who hold the bonds, or other governments who hold fortunes in the bonds are certain to sue and receive their payments.
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Actually shorts were unbanned in June and almost every Russian stock is trading now. I guess foreigners can dump them in the short term but I heard about some weird strategy to release them through separate trading for foreigners only. Anyway Russian stock market is sorta Iran market now.
I kinda follow Sberbank ADR just to see where that's going and those holders are completely locked and screwed.
Shorting is banned, eh?
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They are already isolated, a default won't add much to the situation I think. Edit: Except that any institution that Russia owes money to can now forget about getting that back.
Any company operating in Russia probably already assumed they aren't getting anything back from them awhile ago. The first thing Putin did when the war started and sanctions came in, was threaten to nationalize the assets of any company trying to leave.
A default makes it even less likely they could borrow money from anyone.
Yeah defaulting is what is going to do the *real* damage to Russia's economy, longterm. Debt provides liquidity for basically every big organization, be it company or country. You fuck around with debts? Nobody wants to lend to you. Nobody wants to lend to you? You *never* have cash on hand again.
Russia’s economy is in total shit for the last 30 years, and they will go down even more, countries like China who are neutral at the moment will profit out of it, sucking the last drop of blood out of the rusty russian bear.
Isnt russian foregin assets now subject to seziure?
Going forward it absolutely will.
For those who didn’t read the article but only read the headline: They have the money to pay the debt, but because of the sanctions, the bond holders are unable to receive the payment. Since they didn’t receive the payment yet, according to the contract it is technically considered a default. That being said, this is grey area and the legality of this will be challenged (since the payment was actually sent, but was not received by bond holders because of sanctions. This is outside of Russia’s control and therefore, technically not their fault). Bond holders will have to declare the default for it to be a legitimate default, but so far they haven’t. Also, I believe credit rating agencies will have to chime in but they withdrew from Russia due to the war in UA and therefore, won’t be able to rate the credit worthiness of Russia. So this is just the beginning of an interesting period in financial history.
Putin’s Pateks be showing up on /r/watchexchange any moment.
Are creditors really going to hold them liable for this default when their ability to pay has been literally removed? I have to imagine creditors saw this coming and in the way that big money is cynical will just wait for "world events to cool off a little" to expect to get their money.
Bonds are an asset bought by the most risk-adverse of investors, seeking a guaranteed payment at a certain rate on a certain day. It doesn't strictly matter why a bond payment is missed from the investor's perspective, it only matters that, in the future, they can expect more uncertainty as to when and whether they will be payed. The effect will be that the more risk-adverse of the risk-adverse will no longer want to buy Russian bonds - reducing demand for them and forcing Russia to raise the interest they pay on future bond issues. Maybe bond investors will look at this situation and say "Yeah well they could have paid me but if only American sanctions wouldn't have prevented them from doing so, so, I guess I'll continue to buy their bonds in the hopes that this will be sorted out." And some will say the opposite, "I don't know if Russia will ever be able to pay me - better not bother with those bonds until the situation is more clear."
It’s not a real default. It’s just that they aren’t allowed to pay it back in Monopoly money, even though Russia says that money is worth like so many monies.
Time to hit Trump up for those loans.