Russian bonds tumbled on Monday as investors braced themselves for the possibility that the latest round of western sanctions on Russia could push Moscow to default on its debt for the first time since 1998.
US and European moves over the weekend to cut Russia off from the global financial system, as Moscow stepped up its invasion of Ukraine, have fanned concerns that foreign holders of Russian debt will not be able to receive interest or principal payments.
Sanctions against the Russian central bank are expected to seriously hamper its attempts to deploy its more than $600bn of foreign reserves to shore up its finances, leaving markets contemplating the possibility that a country with debt of only 20 per cent of gross domestic product could fail to repay lenders.