(Bloomberg) — Russia was judged to have breached the terms on a bond after missing a $1.9 million interest payment and triggering an insurance payout potentially worth billions of dollars.
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The Credit Derivatives Determinations Committee said a “failure-to-pay” event occurred on credit-default swaps because Russia didn’t include the additional interest in a late bond payment made at the start of last month.
The trigger is a boon for those that entered into a popular trade pitched by banks in the weeks following Russia’s Feb. 24 invasion of Ukraine — the so-called basis trade where investors buy both the bonds and credit default swaps. The debt in question has already matured, so holders stand to be paid twice — first on the notes themselves and again on the insurance.
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