Making (Non?)Sense of the Russian CDS Auction

CDS auctions intimidate us because there is so much that we don’t understand about how they are supposed to work. But there are others who, thankfully, understand a lot more not only about CDS auctions but also how they work in contexts such as those of Russian sovereign bonds. One of those gurus is Chris Spink of the International Financing Review (and Refinitiv/Reuters Financial). The Russian auction was especially complicated because Russia had different types of dollar and euro bonds out there, some that gave Russia a conditional right to make payments in rubles and some that didn’t. And then there is the fact that while Russia seems to have formally defaulted on many of its foreign currency obligations—therefore probably triggering cross default/acceleration provisions—it is still offering to pay everyone in rubles (regardless of whether they have the special ruble payment clause or not).

Producer: Leanna Doty