Odd Lots Here’s How Messy a Russian Bond Default Could Be
Mar 21, 2022
Mitu Gulati, a sovereign debt expert from the University of Virginia, teams up with Mark Weidemaier, a UNC law professor, to discuss the potential fallout from a Russian bond default. They delve into the complexities of Russia's unique bond structures and past defaults, raising questions about the country's ability to meet its obligations. The conversation highlights the economic and geopolitical implications, including how historical events have shaped today's investment climate and the unusual legal challenges facing investors in this turbulent landscape.
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Unique Geopolitical Context
- The current situation with Russian debt is unusual due to geopolitical tensions and sanctions.
- Historical parallels exist, but the combination of these factors is unique.
Challenges for Creditors
- Creditors face challenges seizing enough Russian assets to recoup losses fully.
- The strategy becomes a waiting game, hoping Russia prioritizes repayment over prolonged disputes.
Russian Debt Structure
- Russia's $150 billion foreign currency debt includes sovereign bonds and corporate debt.
- Within sovereign bonds, some have unusual "alternative payment currency event" clauses.