An auction mechanism will compensate holders of Russian bonds whose payment has not been honoured.
A sort of bet on Russia took place on Monday. Auctions were held on Russian sovereign bonds for which the state had not paid full interest last June. These auctions trigger an insurance mechanism linked to these obligations. The result of this financial operation sheds light, in passing, on the way Western financiers see the future of Vladimir Putin’s country.
But they are not that pessimistic, if we stick to the results announced on Tuesday. The second and last round of bidding established an indicative price of 56.1% of the face value of the bonds in play. As a result, the in-game insurance mechanism will only have to compensate its “policyholders” up to 43.9% of bond value.
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That financiers agree to pay more than 56% of the nominal value of these Russian bonds shows that they are “relatively optimistic» on the possibility of reselling them later at a higher price or being reimbursed…
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