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Russia: On the Brink of Defaulting Again?

Yeah, unfortunately, I don't know how you can ever build trust in the Russian market with the way they run things. Even Russia's banks were recently trading against their central bank. haha! It's every man for himself over there for sure.


On Feb 08 12:10 AM mr freddo wrote:

> I agree with the author that Russia is not a good investment option
> at this time or any time in the near future until they establish
> more of an ability to enforce the basics of corporate governance
> that we take for granted in the US. It is still the wild west in
> Russia.

Russia: On the Brink of Defaulting Again?

The central bank was selling reserves to buy rubles and slow its descent. However, I think the dollar rally may be nearing its end too.

As "risk seeking" comes back in vogue and "risk aversion" diminishes...the dollar loses much of its luster.

Thanks, to all of you for posting...those that agree and those that disagree alike.


On Feb 06 07:48 AM Mordan wrote:

> Russian soveriegn debt is low. Corporate giants debt is high.
>
> But isn't the Russian Central Bank happy to sell all its dollars
> in reserve for a useful purpose?
>
> I would be glad to sell dollars, as I believe the value of the dollar
> is soon to be wortheless.

Russia: On the Brink of Defaulting Again?

Unfortunately, the way Russia "takes over" companies..jails billionaires, halts their stock markets, here and there...etc...it really causes a lot of investors to just shy away from Russia no matter what Washington says or does.


On Feb 06 07:20 AM Dave Wrixon wrote:

> Much of the problem seems to stem from a political determination
> in Washington to undermine the Russian Regime.
>
> As with most US foreign policy initiatives it is doomed to ignominious
> failure.

Russia: On the Brink of Defaulting Again?

With the tumbling of their currency and stocks..it's not very appealing for foreign investors whether a default happens or not. Plus the downgrade from Fitch is just one more reason that it could cause the sentiment to go further south.


On Feb 05 05:28 PM Gtarras wrote:

> i believe the current amount of total Russia sovereign debt is about
> $20 billion only... there is no way the country will have a default
> event.. whether it is a good place to invest, or if its stock market
> will recover, is a different mater... i, too, would stay away...
>
>
>

Russia: On the Brink of Defaulting Again?

You couldn't get me to touch Russia right now at all. Seems to me one would be better off looking at China which as come through this period much better than someone like Russia which has had a horrible time through all of this.

So in the global slump, it's good to say, "Who got beat up the least?" and invest in it, rather than those that took it on the chin.


On Feb 05 02:31 PM Gtarras wrote:

> The info in the link is a total misrepresentation. The amounts there
> are not Russia Sovereign debt, but the debt of the country corporate
> giants, like Gazprom, RosNeft etc... State of Russia is not liable
> for these debt..
>
> So it is very prematurely to speak of the country's default. These
> corporations have there own means to service the debt, and, given
> that the agencies maintain BBB-BB ratings on these companies, I conclude
> they have enough cash to meet their obligations this and following
> years.
>
> Once they rebalance the budget (Putin said they might cut it in half),
> and stop defending ruble, the concerns over Russia default will be
> greatly diminished..
>
> Pity the Russian people, not the fat cat investors...

Russia: On the Brink of Defaulting Again?

The central bank is trying to make it hard for their banks to speculate against the ruble because they are currently trading on it.

That's why they altered those 1 and 7 day interest rates and also swaps...to deter further speculation on their parts.


On Feb 05 10:46 AM kelm wrote:

> But wait there's more! This just ame out on Bloomber this morning
>
>
> www.bloomberg.com/apps...;sid=alZcF5bve18o
>
>
> Specifically it says that the Russian central bank is in effect bankrolling
> the speculative attack on the ruble because it is the largest Russian
> banks that are doing the speculating.
>
> Everyone needs to consider how this scenario would look in the US
> if hedge funds here and abroad took on the dollar.

Russia: On the Brink of Defaulting Again?

haha, yeah they're a huge oil and gas exporter. Both are crucial to them. Correct.


On Feb 05 04:45 AM bbzz24 wrote:

> the word 'gas' was censored.

Russia: On the Brink of Defaulting Again?

While that's technically true...tell that to the government that has to continually devalue the ruble when WTIC crude drops. It's killing them.


On Feb 05 04:43 AM bbzz24 wrote:

> russian oil and are NOT sold at any exchange market prices, but according
> to a furmula that takes into consideration the cost of many alternative
> energy sources such as coal, nuclear fuel etc., then is smoothed
> out over 6 months.

Russia: On the Brink of Defaulting Again?

Russia makes money when energy prices are high. In other words, you're pulling oil out of the ground at somewhat of a fixed cost. However, what you can get for that oil varies. When its high, so are your profit margins. When its priced low, your profit margins are squeezed big time. At times, it can even sell (for short periods of time) at under production costs...which really kills. With prices where they are right now...it's hurting them big time.

Thanks for posting.


On Feb 05 03:33 AM Simon Smelt wrote:

> Don't quite follow the logic here. Energy is priced on an international
> market. So, now prices have stabilised in U.S. $ terms, Russian
> energy exporters should be seeing growing profits as the ruble falls
> - unless their input prices are mainly fixed externally too.

>
> Or is the fear that in the event of a Russian default, the goverment
> will seize profits from the energy companies or appropriate foreign
> shareholdings?

Russia: On the Brink of Defaulting Again?

Correct, that's their big issue...oil is too low. If it were to trade sideways between 30s-40 for a while, it could really continue to hurt them a lot. Agreed.


On Feb 05 03:21 AM Nikola wrote:

> See www.cbonds.info/eng/ne...
>
>
> Russia has about half a trillion of debt and and 2009 payments amount
> to about $100B. If they have $400B left in reserves, decision to
> default can only be a political one.
>
> Russia will not default in 2009. Long term prospects are directly
> correlated with the price of energy, more specifically oil. Russia
> does not make money when oil is under around $40.
>