From: slider@anashram.com   
      
   The impending Russian debt default is likely to be one of the most   
   difficult in history to resolve, and could even lead the US to permanently   
   seize assets from the country's central bank, according to a report from   
   the consultancy Oxford Economics.   
      
   Russia is facing its first default on its foreign-currency debt since the   
   aftermath of the Bolshevik revolution in 1918.   
      
   The US Treasury earlier this month blocked Russia from paying $650 million   
   due on two bonds using funds held at American banks. Russia has instead   
   tried to pay in rubles, but credit ratings agencies have said this would   
   constitute a default.   
      
   Russia has a 30-day grace period from April 4 in which to pay in dollars.   
   But thoughts are now turning to the next steps, and how bondholders might   
   recoup their money.   
      
   Tatiana Orlova, lead emerging markets economist at Oxford Economics, said   
   investors face a "very long and difficult" legal road. "Russia's debt   
   crisis will be among the most difficult in history to resolve, since the   
   default has its roots in politics rather than finance," she wrote in a   
   report that was sent to clients Thursday.   
      
   *One of the key problems is that political and financial relations between   
   Russia and the West have completely broken down.* That makes the usual   
   default process, whereby bondholders and the government enter negotiations   
   and thrash out a deal, seem unlikely to happen.   
      
   Orlova said another problem for bondholders is that Ukraine may lay a   
   claim to Russian assets in international courts to pay for the rebuilding   
   of the country. In that case, investors would have to weigh up whether   
   they want to compete with the Ukrainian government for Russian assets.   
      
   The economist said the US might eventually end up seizing the money from   
   the Russian central bank's foreign currency reserves. Western governments   
   have already frozen the bulk of the roughly $600 billion stockpile.   
      
   President Joe Biden earlier this year ordered that half of Afghanistan's   
   central bank reserves, which were also frozen, be made available as   
   possible compensation for victims of 9/11 and to fund humanitarian support   
   in the country.   
      
   "The US administration could possibly find a stronger moral cause for   
   splitting the US-denominated portion of Russia's FX reserves between   
   Ukraine and bondholders," Orlova said.   
      
   Russia's Finance Minister Anton Siluanov has said the government has   
   fulfilled its obligations by paying in rubles. He said last week Western   
   governments are forcing Russia into a default and threatened to take legal   
   action.   
      
   It's not just holders of Russian sovereign debt who may have to take to   
   the courts to try to get their money.   
      
   Orlova's report said there is likely to be an "avalanche" of Russian   
   corporate debt defaults, given that the US is taking a hard line and   
   banning American banks from processing payments.   
      
   An international committee of banks last week deemed state-owned Russian   
   Railways to be in default, after sanctions stopped the company from making   
   bond payments.   
      
   There were roughly $98 billion of Russian corporate foreign-currency bonds   
   outstanding as the war began in February, according to JPMorgan, with   
   $21.3 billion owned by foreign investors.   
      
   https://www.businessinsider.com/russia-debt-default-us-could-sei   
   e-assets-resolution-ukraine-sanctions-2022-4?r=US&IR=T   
      
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