Russia-Ukraine war: Limited impact on SGD bonds

AS THE situation in Russia and Ukraine continues to evolve, global bond markets were impacted by the sanctions imposed on Russia.

Russia faced its first test on foreign-currency debt obligations as it had US$117 million in coupon payments due for 2 US dollar-denominated government bonds on Mar 16. Russian government bonds were deep in junk territory as the 3 main credit agencies - S&P, Moody's and Fitch - all revised their credit rating for Russian bonds downwards.

Sanctions on Russia limit the ability of the country to service debt obligations in foreign currency. The failure to pay off the coupons in dollars within the grace period of 30 days will trigger a default, last seen in 1998 when Russia defaulted on local-currency debt.