Russia's economic bankruptcy is a matter of weeks

If Vladimir Putin does not call the mind soon and withdraw from Ukraine, then Russia will be on the verge of being deported for a very long time from international capital markets. Every owner of Russian government bonds is in big trouble today.

The Russian government has tried to pay off payments to its creditors, but the US Treasury Office for Foreign Property Control is inevitably tightening and professionally lactating the money flow.

Also closing are all support roads and channels for companies linked to the Russian government for continuing their debt service. Credit rating agencies and standard bond index providers are removing Russian obligations from their businesses.

An official bankruptcy by the Russian government is likely to occur within the coming weeks. In fact Moscow has acknowledged the serious crisis it is facing, threatening legal action, and saying it will ban bond sales for the rest of the year.

Who or what could be successfully charged, this remains unclear. The prospect of receiving new debts from Russia had disappeared since the latter started occupying Ukraine on 24 February. As Russian Finance Minister Anton Siluanov commented on in the Russian newspaper “Izvetia”, borrowing costs for any bond sale will be “assuming”.

Many years will pass before we see Russia gain normal access to international markets for dollars, euros or other international currency. But Russia is also halting its domestic release. This is not as problematic as Europe still pays $1 billion a day for buying Russian energy.

But if sanctions on coal were followed by bans on the purchase of Russian oil and gas, these revenue flows would be cut off, and Russia's inability to borrow further deepened. “Russia will not be able to repay its debts for perhaps a decade. This means that it will not have access to international capital markets, will face much higher borrowing costs, even from the Chinese there will be no investments, economic growth, and citizens will face lower living standards. This is a terrible prospect for Russia and the Russians”- says Tim Ash, strategist of emerging markets at the “Bluby National Society” company.

The most shocking development of the last days is the announcement of a state of bankruptcy by Russian Railways, which no longer have the opportunity to pay their debt. And now that the precedent has been created, other state companies will have the same fate.

The percentage for which bond owners will be compensated has not yet been determined, even though it is likely close to the full amount provided by insurance companies. But what's important for the finance industry, which has experienced some disagreements over credit derivatives, is that this time the system is functioning as planned.

But the Russian borrowers face a much more serious situation than during the previous 1998 Russian debt crisis, when only their payments were lacking in rubles, while foreign currency creditors paid off as usual, while the rest of the world committed themselves to helping him. This time, Russia is isolated. She faces a financial crisis of her own, caused only by her own guilt. /“Bloomberg” World.al