International investors are bracing themselves for a wave of defaults on Russian debt repayments, as the Kremlin tightens its grip over the country’s financial system following its invasion of Ukraine.
Russia’s total debt owed to foreigners stood at $490bn at the end of September, according to the Central Bank of Russia. But just how much of that exposure — spread across bonds, loans, direct investments and trade credits — will be wiped out is the thorny question confronting international investors.
Foreigners own $20bn of the $39.6bn in Russia’s outstanding “hard currency” sovereign debt, issued via dollar and euro-denominated bonds. These have plunged in value as the war in Ukraine has escalated.
Insurance companies in Taiwan are particularly exposed after investing $4.5bn in Russian government bonds, according to the local regulator.
Fitch, the rating agency, warned on March 8 that a default on Russia’s sovereign debt was…