Russia in Financial Crisis (Again), Ruble Collapses (Again), Central Bank Does Mother of All Rate Hikes (Again), US Stocks Shrug (Again) | Wolf Street

As the 25-year chart below shows, ruble-collapses and financial crises are a As the 25-year chart below shows, ruble-collapses and financial crises are a regular occurrence in Russia: The 1998 Russian Financial Crisis, Russia’s part in the Global Financial Crisis, the 2014 Russian Financial Crisis, and now the 2022 Russian Financial Crisis. Over those 25 years, the ruble has collapsed by 97% against the USD (chart via Trading Economics)

These ruble collapses are why long-term ruble-denominated debt is toxic, and there are few takers and the yields are very high, and this is why Russia cannot borrow much in rubles. And whoever is holding ruble debt right now just took a huge loss in terms of the purchasing power of those bonds. Bond trading in Russia is suspended for now.

In terms of foreign-currency debt issued by the government, the cost of insuring it against default soared to levels that indicate a 56% chance of default, according to Bloomberg.

The Russian banks in Russia, which are in serious trouble, will be propped up by the Central Bank. Private shareholders may get wiped out and be replaced by the state. Sberbank, Russia’s largest bank, is already majority-owned by the state (50% plus one voting share).  On Monday, authorities closed the stock market in Russia, and shares are not trading.

Russia in Financial Crisis (Again), Ruble Collapses (Again), Central Bank Does Mother of All Rate Hikes (Again), US Stocks Shrug (Again) | Wolf Street