A Russian Default Is a Question of When, Not If

Unless Vladimir Putin rapidly comes to his senses and pulls out of Ukraine, Russia is on the verge of being cast out of the international capital markets for a very long time. Any bondholders still invested in the nation’s debt are on their own.

The Russian government has tried to maintain payments to its creditors, but the U.S. Treasury's Office of Foreign Assets Control is inexorably and expertly tightening the noose to halt those money flows. All the avenues and back-channels for Russian government-related entities to keep servicing their debts are being shut down. The credit-rating agencies and benchmark bond-index providers are dropping Russia bonds from their businesses. A formal default by the government is likely to be triggered in the next few weeks.