Russia could default on its foreign debt for the first time in a century

Russia could default on its foreign debt for the first time in a century

Transcript¹

Because of sanctions imposed after the invasion of Ukraine, Russia is looking at its first foreign debt default since 1918. Moscow says it will take legal action if forced into default.

A MARTINEZ, HOST:

Russia could default on its foreign debt for the first time in a century. It's a consequence of economic sanctions imposed after the invasion of Ukraine. Wailin Wong and Adrian Ma from NPR's daily economics podcast, The Indicator² from Planet Money, explain Russia and its creditors³ may be headed for a long legal showdown.

WAILIN WONG, BYLINE⁴: Elina Ribakova is deputy chief economist⁵ at the International Institute of Finance.

ELINA RIBAKOVA: Russia's outstanding debt is about 17% of GDP. Seventeen percent of GDP is almost ridiculously low number.

ADRIAN MA, BYLINE: And just for comparison, the U.S., France, Canada - their ratios of government debt to GDP are over 100%. Elina says Russia wanted to insulate itself from global capital markets, so it kept borrowing to a minimum.

WONG: But Russia did sell government bonds to raise money, and some of that was foreign debt - bonds issued in dollars or euros, typically held by institutional investors⁶ around the world who collect regularly scheduled interest payments.

MA: Even with sanctions freezing Russian accounts at international banks last month, Elina says the U.S. Treasury⁷ made an exception. They let Russia's interest payments to bondholders go through. So the foreign bondholders - they got their money.

WONG: But then on April 4, when Russia had $650 million in bond payments coming due...

RIBAKOVA: Russian authorities tried to do the same in terms of paying from the existing frozen accounts. Then that's where the U.S. Treasury said, no, you cannot do that. Then the Russian authorities said, look, if we cannot do this, we're going to try to pay you in rubles.

MA: This was a problem because the contracts for the bonds say the payments have to be made in U.S. dollars. So for credit-rating agencies like Standard & Poor's, those rubles that the Russian government had sitting in local accounts - they don't count as payment.

WONG: This back-and-forth took a couple of days to play out, but when the dust settled, S&P declared Russia to be in selective default. That means they're in default on just those bonds.

MA: Russia right now is in this 30-day grace period to make those payments in dollars, and that period ends in early May. That means Russia would officially be in default when the grace period ends.

WONG: The fallout from a default would be relatively⁸ contained, given how small Russia's foreign debt load is. But it would cement Russia's status as an economic pariah⁹, cut it off from global financial markets and make the cost of future borrowing really high.

MA: Now, normally, when a borrower defaults on their obligations, it is because they don't have the money. But that's not exactly the case here.

RIBAKOVA: This is unwillingness¹⁰ to pay, rather than inability to pay. They're currently generating every day significant inflows - so foreign exchange from their large sales of energy. So Russia does have the money. The issue of unwillingness is sort of tit for tat. You took our money with sanctions, and therefore, look, we cannot do anything. We're going to pay you in rubles.

WONG: Russia's finance minister told local media the country would take legal action if Western countries forced it into default. He didn't really offer more details, but sovereign debt experts are bracing¹¹ themselves for a long, messy showdown in the courts. The last time the country defaulted on its foreign debt was after the Bolshevik Revolution. In 1918, the new Russian government under Vladimir Lenin repudiated¹² the debt that had been borrowed by the czar. Most of those foreign creditors are still waiting to get their money back.

MA: Adrian Ma.

WONG: Wailin Wong, NPR News.

1 transcript   

n.抄本，誊本，副本，肄业证书

参考例句：

• A transcript of the tapes was presented as evidence in court.一份录音带的文字本作为证据被呈交法庭。
• They wouldn't let me have a transcript of the interview.他们拒绝给我一份采访的文字整理稿。

2 indicator   

n.指标；指示物，指示者；指示器

参考例句：

• Gold prices are often seen as an indicator of inflation.黃金价格常常被看作是通货膨胀的指标。
• His left-hand indicator is flashing.他左手边的转向灯正在闪亮。

3 creditors   

n.债权人，债主( creditor的名词复数 )

参考例句：

• They agreed to repay their creditors over a period of three years. 他们同意3年内向债主还清欠款。 来自《简明英汉词典》
• Creditors could obtain a writ for the arrest of their debtors. 债权人可以获得逮捕债务人的令状。 来自《简明英汉词典》

4 byline   

n.署名；v.署名

参考例句：

• His byline was absent as well.他的署名也不见了。
• We wish to thank the author of this article which carries no byline.我们要感谢这篇文章的那位没有署名的作者。

5 economist   

n.经济学家，经济专家，节俭的人

参考例句：

• He cast a professional economist's eyes on the problem.他以经济学行家的眼光审视这个问题。
• He's an economist who thinks he knows all the answers.他是个经济学家，自以为什么都懂。

6 investors   

n.投资者，出资者( investor的名词复数 )

参考例句：

• a con man who bilked investors out of millions of dollars 诈取投资者几百万元的骗子
• a cash bonanza for investors 投资者的赚钱机会

7 treasury   

n.宝库；国库，金库；文库

参考例句：

• The Treasury was opposed in principle to the proposals.财政部原则上反对这些提案。
• This book is a treasury of useful information.这本书是有价值的信息宝库。

8 relatively   

adv.比较...地，相对地

参考例句：

• The rabbit is a relatively recent introduction in Australia.兔子是相对较新引入澳大利亚的物种。
• The operation was relatively painless.手术相对来说不痛。

9 pariah   

n.被社会抛弃者

参考例句：

• Shortly Tom came upon the juvenile pariah of the village.不一会儿，汤姆碰上了村里的少年弃儿。
• His landlady had treated him like a dangerous criminal,a pariah.房东太太对待他就像对待危险的罪犯、对待社会弃儿一样。

10 unwillingness   

n. 不愿意，不情愿

参考例句：

• Her unwillingness to answer questions undermined the strength of her position. 她不愿回答问题，这不利于她所处的形势。
• His apparent unwillingness would disappear if we paid him enough. 如果我们付足了钱，他露出的那副不乐意的神情就会消失。

11 bracing   

adj.令人振奋的

参考例句：

• The country is bracing itself for the threatened enemy invasion. 这个国家正准备奋起抵抗敌人的入侵威胁。
• The atmosphere in the new government was bracing. 新政府的气氛是令人振奋的。

12 repudiated   

v.（正式地）否认( repudiate的过去式和过去分词 )；拒绝接受；拒绝与…往来；拒不履行（法律义务）

参考例句：

• All slanders and libels should be repudiated. 一切诬蔑不实之词，应予推倒。 来自《现代汉英综合大词典》
• The Prime Minister has repudiated racist remarks made by a member of the Conservative Party. 首相已经驳斥了一个保守党成员的种族主义言论。 来自辞典例句