On Thursday, investors followed Russia–Ukraine peace negotiations and news of foreign currency coupon payments on Russia’s sovereign debt. The Russian rouble climbed in Moscow trade and was slightly lower abroad. As the invasion reached its fourth week, Russia resumed bombardment of Kyiv, Ukraine’s capital. Russia’s offensive has paused, according to Western sources and Ukrainian authorities. Officials from both sides met again for peace negotiations in the meanwhile, but they maintained their stances remained opposed.
According to two market sources, some creditors have received payment of Russian bond coupons due this week in dollars. As a result, Russia may have avoided its first external bond default in a century for the time being.
“Even if this week’s payment is made,” JPMorgan (NYSE: JPM) stated in a client note, “investors will need to monitor the next future installments since they may be treated differently.” Bonds with fallbacks that allow for payment in roubles have dollar coupon payments due next week. On April 4, a $2 billion bond matures. In Moscow, the rouble gained 4.7 percent to settle at 103.15 per dollar and 3.5 percent to trade at 113.715 per euro. Over the last four weeks, it has lost more than 20% versus both currencies.
New Russia Sanctions
As combat resumed on Thursday, international indignation over Russia’s invasion of Ukraine intensified. As a result, the West has slapped unprecedented sanctions on Russia, precipitating the country’s greatest economic crisis since the fall of the Soviet Union in 1991. According to a client document from Citigroup (NYSE: C), Russia has enacted harsh new requirements for foreigners seeking licenses to acquire and sell Russian assets ranging from stocks to real estate, generating new fears about hefty write-downs for Western investors.
The central bank has ordered that the Moscow stock market remain closed for the remainder of the week. Moscow’s stock exchange last traded on February 25, following which the central bank-imposed restrictions. The central bank is currently the center of attention as it prepares to convene a rate-setting meeting on Friday. The bank should retain the key rate at 20%. It may reveal further details about its future financial sector regulation plans.
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