‘Cosmic’ borrowing costs stop Russian bond sales as debt teeters on brink of default
“Cosmic” borrowing costs have forced Russia to stop bond sales for the rest of the year, as its debt teeters on the brink of defaulting.
Sanctions on the Kremlin continued to bite, as its finance minister revealed drastic action this week.
This comes after Western sanctions forced it to pay bondholders in roubles, despite it being due in dollars, meaning an estimated 99 per cent chance of default within a year.
Minister Anton Siluanov told a Russian newspaper Izvestia, according to the Telegraph: “We do not plan to go to the local market or foreign markets this year. It makes no sense because the borrowing cost would be cosmic.”
With the Kremlin subject to international sanctions and western companies not paying in roubles, the Russian economy has been plunged into chaos with rampant inflation. Major brands from McDonald’s to McDonald’s to Starbucks and Coca-Cola to Heineken have all quit Moscow amid growing pressure for others to sever ties.
With a default looking increasingly likely, Russia has threatened the west if the worst case scenario happens – but it is not clear what legal options are open.
Siluanov said, according to Reuters: “Of course we will sue, because we have taken all the necessary steps to ensure that investors receive their payments”.