Connect with us

Stock Markets

Russia in historic default as Ukraine sanctions cut off payments

Published

on


© Reuters. FILE PHOTO: The clock on Spasskaya tower showing the time at noon, is pictured next to Moscow?s Kremlin, and St. Basil?s Cathedral, March 31, 2020. REUTERS/Maxim Shemetov

By Karin Strohecker, Andrea Shalal and Emily Chan

LONDON/NEW YORK (Reuters) -Russia defaulted on its international bonds for the first time in more than a century, the White House and Moody’s (NYSE:MCO) credit agency said, as sweeping sanctions have effectively cut the country off from the global financial system, rendering its assets untouchable.

The Kremlin, which has the money to make payments thanks to oil and gas revenues, has rejected the claims, and accused the West of driving it into an artificial default.

Earlier, some bondholders said they had not received overdue interest on Monday following the expiry of a key payment deadline on Sunday.

Moody’s credit agency later on Monday said that the missed coupon payment constituted a default.

“Further defaults on coupon payments are likely,” Moody’s analysts wrote.

Russia has struggled to keep up payments on $40 billion of outstanding bonds since its invasion of Ukraine on Feb. 24.

“This morning’s news around the finding of Russia’s default, for the first time in more than a century, situates just how strong the actions are that the U.S., along with allies and partners, have taken, as well as how dramatic the impact has been on Russia’s economy,” the U.S. official said on the sidelines of a G7 summit in Germany, which U.S. President Joe Biden is attending.

Russia’s efforts to avoid what is its first major default on international bonds since the Bolshevik revolution more than a century ago hit a roadblock in late May when the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) effectively blocked Moscow from making payments.

A formal default would be largely symbolic given Russia cannot borrow internationally at the moment and doesn’t need to thanks to plentiful oil and gas export revenues. But the stigma would probably raise its borrowing costs in future.

“With Russia going into sovereign default the international community has moved into a new, more aggressive phase of its sanctions campaign against Moscow,” said Adam M. Smith, partner at Gibson Dunn in Washington.

The payments in question are $100 million in interest on two bonds, one denominated in U.S. dollars and another in euros, that Russia was due to pay on May 27. The payments had a grace period of 30 days, which expired on Sunday.

“Russia’s default – already determined by the failure to pay interest last month – had been largely priced in and bonds have been in the 10-20 cents area for a long time,” said Gabriele Foa, portfolio manager of the Global Credit Opportunities Fund at Algebris. “I do not expect creditors to organize and hold talks for a restructuring soon, as these talks are likely not possible amid political tensions.”

Russia’s finance ministry said it made the payments to its onshore National Settlement Depository (NSD) in euros and dollars, adding it had fulfilled obligations.

In a call with reporters, Kremlin spokesperson Dmitry Peskov said the fact that payments had been blocked by clearing house Euroclear because of Western sanctions on Russia was “not our problem”.

Euroclear did not respond to a request for comment.

Some Taiwanese holders of the bonds had not received payments on Monday, sources told Reuters.

With no exact deadline specified in the prospectus, lawyers say Russia might have until the end of the following business day to pay these bondholders.

Credit ratings agencies usually formally downgrade a country’s credit rating to reflect default, but this does not apply in the case of Russia as most agencies no longer rate the country.

“I think the market convention will be that it is a default – though the technical issues are rather complex,” said Kaan Nazli, portfolio manager at Neuberger Berman, which has a small exposure to Russian sovereign debt but does not hold the bonds that were due a payment on May 27. “It is a somewhat politically driven default.”

Emerging markets trade group EMTA recommended on Monday that bonds issued by the Russian government should be traded without accrued interest, the way bonds in default are typically traded.

LEGAL TANGLE

The legal situation surrounding the bonds looks complex.

Russia’s bonds have been issued with an unusual variety of terms, and an increasing level of ambiguities for those sold more recently, when Moscow was already facing sanctions over its annexation of Crimea in 2014 and a poisoning incident in Britain in 2018.

Rodrigo Olivares-Caminal, chair in banking and finance law at Queen Mary University in London, said clarity was needed on what constituted a discharge for Russia on its obligation, or the difference between receiving and recovering payments.

“All these issues are subject to interpretation by a court of law,” Olivares-Caminal told Reuters.

Stock Markets

Morgan Stanley: bear market rally to continue

Published

on

One of Wall Street’s best-known bears, Michael Wilson, thinks the S&P 500 will rise another 7% before turning down, so the bear market rally will continue for now, writes Market Watch.

After the Dow Jones, S&P 500 and Nasdaq Composite joined their strongest weekly gains since at least May last Friday, Wilson, who is chief strategist and head of U.S. equity markets at Morgan Stanley (NYSE:MS), told clients that there could be another 5% to 7% before the downward trajectory of U.S. stocks resumes during the latest bear market recovery.

Wilson has held a bearish view of the stock market for about 2 years and correctly predicted a sell-off this year.

Wilson explained in a research note sent out to clients on Monday that a pullback in the 38-50% drop in the stock market this year “would not seem like something unnatural, not consistent with the previous bear market rally.”

While growth concerns have triggered a sell-off in commodities and lowered inflation expectations, the fact that the U.S. economy is already slowing and heading toward recession means that any market rally is likely to be short-lived, and U.S. stocks are likely to eventually fall.

Wilson mentioned in the note that the bear market is not over yet, although it may appear otherwise in the next few weeks as the market takes the rate cut as a sign that the Fed can still manage a “soft landing” and prevent a meaningful revision to earnings forecasts.

U.S. stocks rose last week as investors now hope the slowing economy and falling commodity prices may inspire the Fed to raise interest rates less sharply. Federal funds futures, a derivative used by investors to bet on the pace of the Fed’s monetary policy changes, estimate with a high probability that the Fed will be forced to start cutting interest rates again as soon as next summer.

They also consider the lower peak in the federal funds rate: it will peak around 3.5% at the end of 2022 instead of 3.75% just a couple of weeks ago. Wilson also pointed out the drop in Treasury yields: the 10-year Treasury bond yield went from 3.230% to a low of 3.07% on Friday before rebonding again on Monday.

Wilson expects the S&P 500 index to fall to around 3,400 points if the U.S. Federal Reserve manages to get a “soft landing” for the economy — which Fed Chairman Jerome Powell said last week would be “a very difficult thing to do.”

Wilson expects that if the U.S. economy plunges into recession, the S&P 500 index will fall to around 3,000 points. In any case, Wilson believes that U.S. stocks are still highly valued because the risk premium — that is, the measure of compensation that investors receive for the extra risk of owning stocks instead of bonds — remains about 300 basis points higher than the 10-year Treasury bond yield, which is considered a “risk-free rate.” 



Continue Reading

Stock Markets

Easing chip shortages to help Volkswagen in H2 – CEO

Published

on


© Reuters. FILE PHOTO: Volkswagen logo is pictured at the 2022 New York International Auto Show, in Manhattan, New York City, U.S., April 13, 2022. REUTERS/Brendan McDermid/File Photo

BERLIN (Reuters) – Volkswagen (ETR:VOWG_p) sees a strong second half of 2022 and expects progress in catching up with rival Tesla (NASDAQ:TSLA) as easing chip shortages start to offset supply chain bottlenecks and rising costs, the carmaker’s CEO said on Tuesday.

“We are earning more than ever,” Chief Executive Herbert Diess said at a works meeting, adding Volkswagen is ramping up electric vehicle volumes in its biggest markets in Germany and China thanks to easing semiconductor shortages.

This should allow the carmaker to narrow the Volkswagen-Tesla gap this year and meet its goal of becoming market leader by 2025 if it seizes the moment while the U.S. electric car maker burns cash on large investments, the CEO said.

“Elon (Musk) has to ramp up two highly complex factories in Austin and Gruenheide at the same time – as well as expand production in Shanghai. That’s going to take strength out of him,” Diess said.

Continue Reading

Stock Markets

Reliance Chairman Mukesh Ambani steps down as director of telecom arm

Published

on


© Reuters. FILE PHOTO: Mukesh Ambani, Chairman and Managing Director of Reliance Industries, arrives to address the company’s annual general meeting in Mumbai, India July 5, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) – Reliance Industries Chairman Mukesh Ambani has stepped down as director of Reliance Jio Infocomm Ltd, the conglomerate’s telecom arm said on Tuesday.

Reliance Jio said https://refini.tv/3Nrs773 it has appointed Mukesh’s son and non-executive director Akash Ambani as the chairman of its board. Akash has been involved with the telecom unit since its launch in late 2016, where he started as a director.

India’s telecoms sector had been upended after the entry of Jio, which triggered a price war that forced some rivals out of the market and turned profits into losses.

Jio, which started out offering mobile teleservices, has been aggressively investing in services like internet broadband and forging ties with handset makers to launch low-cost smartphones and providing 5G services.

Continue Reading

News

voyager crypto voyager crypto
Cryptocurrency19 mins ago

Voyager Digital is restructuring and preparing for sale

Cryptocurrency broker Voyager Digital said it is preparing a plan to restructure and resume cash withdrawals from the platform According...

Bitcoin oversold Bitcoin oversold
Cryptocurrency28 mins ago

Mike McGlone: Ethereum and Bitcoin oversold

A senior commodities strategist at Bloomberg Intelligence believes that according to technical analysis of the market, leading cryptocurrencies are selling...

next ethereum fork next ethereum fork
Cryptocurrency35 mins ago

Chainlink protocol developers refused to support next Ethereum fork

Ethereum is preparing to switch to PoS, and the community expects forks of the second cryptocurrency to appear on the...

predictit news predictit news
Cryptocurrency40 mins ago

PredictIt news: CFTC shuts down PredictIt prediction market in US

Important PredictIt news: The U.S. Commodity Futures Trading Commission (CFTC) has issued an order to shut down one of the...

is bitcoin mining profitable is bitcoin mining profitable
Cryptocurrency60 mins ago

Is bitcoin mining profitable today? Bitcoin mining difficulty drops for third month in a row

Is bitcoin mining profitable? The difficulty of mining bitcoin began to drop precipitously as the largest-capitalization cryptocurrency’s price fell below...

wazirx news wazirx news
Cryptocurrency1 hour ago

WazirX news: Indian authorities froze assets of WazirX

WazirX news: India’s economic intelligence agency froze assets of Binance-bought WazirX after allegations of money laundering Indian authorities have seized...

us recession and stock market us recession and stock market
Forex2 days ago

US recession and stock market. Thomas Barkin, Fed: Recession is virtually impossible

The U.S. recession and the stock market are closely linked. The key U.S. stock market indices – Dow Jones, NASDAQ...

usd to euro rate usd to euro rate
Forex2 days ago

Euro rate chart: the euro is not going into a trap

No matter how much FOMC officials try to convince investors of the Fed’s commitment to aggressive tightening of monetary policy,...

european stock market news european stock market news
Forex2 days ago

European stock market news: Europe started to lag behind the rise in U.S. stock prices

Current European stock market news: U.S. stock futures rose slightly Friday, helped by tech stocks as investors prepare for the...

dollar rate exchange dollar rate exchange
Forex2 days ago

Dollar rate today live: What is happening to the dollar today?

As you know, the dollar exchange rate has been lagging lately. We all wish wars would end as quickly as...

u.s. stock market capitalization 2022 u.s. stock market capitalization 2022
Forex2 days ago

U.S. stock market capitalization 2022: Morgan Stanley advises against buying U.S. stocks

U.S. stock market capitalization by 2022 leaves much to be desired. The key U.S. stock market indexes – DOW Jones,...

eur/usd chart eur/usd chart
Forex2 days ago

EUR/USD: European Union’s main currency problems

EUR/USD: The pair stayed in the flat, as investors refrained from making big bets before the U.S. labor market data...

asian stock market charts asian stock market charts
Forex2 days ago

Asian stock market charts: Major Asian indicators are up 0.88%

What’s happening on the Asian stock market charts right now? The major Asian indicators are mostly up 0.88%. Some indicators,...

nonfarm payrolls and recession nonfarm payrolls and recession
Forex2 days ago

Nonfarm Payrolls and Recession: July’s NonFarm Payrolls Surprise – What Next?

As you know, nonfarm payrolls and the recession are always closely related. The U.S. Federal Reserve sees its main goal...

stock market today stock market today
Forex2 days ago

Stock market today: Stock Europe closes the week with a fall

Stock market today: In trading on Friday, key stock indicators in Western Europe are showing a decline amid weak financial...

Best US brokers Best US brokers
Forex2 days ago

Top brokers USA

Due to the strictness of the supervisory agencies to the investment market in the United States, traders who choose a...

nasdaq chart today nasdaq chart today
Commodities2 days ago

Nasdaq 100 index rises for third straight week 

The Nasdaq chart today, which reflects the value of stocks of U.S. technology companies, rose 20% from its June low....

carbon emissions and climate change carbon emissions and climate change
Commodities2 days ago

4 Dividend Stocks Offering Double-Digit Yields: An Easy Way To Earn Passive Income

Carbon emissions and climate change are well known, so many global companies are concerned about this factor. Today it is...

China's military exercises near Taiwan China's military exercises near Taiwan
Commodities2 days ago

Situation in Taiwan leads to detours and delays in global transport

China’s military exercises near Taiwan have pushed the situation in the region to the limit. Therefore, some ships carrying liquefied...

historical price of gasoline in the US historical price of gasoline in the US
Commodities2 days ago

Demand for gasoline in the U.S. has fallen below pandemic levels

According to the U.S. Energy Information Administration, average monthly gasoline consumption has fallen below the 2020 level. The demand surge...

oil prices in asian countries oil prices in asian countries
Commodities2 days ago

Saudi Arabia raises oil prices in Asian countries to record levels

Aramco is raising Arab Light oil prices by 50 cents in September. It is a record increase in oil prices...

current electricity prices UK current electricity prices UK
Commodities2 days ago

Current electricity prices UK: Marginal annual energy costs in the UK jump above £4,000

Current electricity prices in the UK are rising fast. According to Investec Bank Plc, the price ceiling paid by households...

oil prices chart oil prices chart
Commodities2 days ago

Oil prices daily adjusted upward

The price of October futures for Brent at London’s ICE Futures Exchange stood at $95.74 per barrel, up $1.62 (1.72%)...

current gold price current gold price
Commodities2 days ago

Current gold price stabilizes after rally

Current gold prices on Thursday morning grew slightly; with the second day remaining above $1,800 per troy ounce; markets are...

futures wheat price futures wheat price
Commodities2 days ago

Futures wheat prices: wheat rose sharply on the Chicago Exchange

Futures wheat prices as well as soybeans in Chicago rose sharply on Thursday. Wheat quotations recovered from 6-month lows on...

daily crypto news daily crypto news
Cryptocurrency4 days ago

Latest crypto news: What happened on the crypto market as of August 4 morning

Daily crypto news: Starbucks will develop loyalty program with web3 tools, Solana developers found alleged culprit of ecosystem exploit, ZBExchange...

staking cardano ada staking cardano ada
Cryptocurrency4 days ago

Bank Sygnum adds support for staking Cardano (ADA)

Swiss digital bank Sygnum announced that staking Cardano ADA is now available to its users.  Sygnum Bank customers can now...

next ethereum update next ethereum update
Cryptocurrency4 days ago

Next Ethereum update will attract more investment from institutions

Next Ethereum update will be a deciding factor in increasing institutional investment in cryptocurrency A Bloomberg Intelligence report suggests that...

news about coinbase news about coinbase
Cryptocurrency4 days ago

Breaking news about Coinbase: Court finds ex-Coinbase employee accused of insider trading not guilty

Breaking news about Coinbase: A federal court in Manhattan has found not guilty a former employee of Ishan Wahi, whom...

inflation in Europe by country inflation in Europe by country
Forex4 days ago

Inflation in European Union: Producer prices in the euro area rose by 1.1% in June and by 1.3% in the EU

Inflation in the European Union: Euro-area producer prices (PPI) rose 1.1% in June 2022 compared to the previous month, when...

Trending

©2021-2022 Letizo All Rights Reserved