Business

What are the sanctions on Russia and what does it mean? 10 points

March 14, 2022
Sezarr

What are the sanctions on Russia and what does it mean?

Russia’s invasion of Ukraine has resulted in severe economic sanctions and a huge backlash from corporates operating in Russia. Here’s a look at Western sanctions on Russia, which Moscow calls a “special operation” in Ukraine.

Here’s your 10-point cheatsheet for this big story:

  1. The Russian energy sector is facing sanctions sanctions by the US and other countries. Import restrictions can be imposed on select companies to reduce market tensions.

  2. The assets of Russia’s Central Bank Reserve were frozen by the Group of Seven countries, the largest state-owned banks were cut from SWIFT, and a number of individuals, including some oligarchs, were hijacked by the US/UK/EU and other countries. was approved.

  3. New Russian banks can be cut off from SWIFT (EU offer), or all Russian banks can be cut off from SWIFT (UK offer).

  4. About 200 commercial companies are going to suspend, split or terminate any relationship with Russia.

  5. Amid the ‘Great Exodus’ of commercial trade from Russia, Russian issuers lost their presence in global indices as securities trading on the Moscow Exchange has been suspended since February 25.

  6. Rating agencies have kept Russia’s sovereign rating at the pre-default level. Moody’s downgrades Russia’s rating from ‘B3’ to ‘CA’. S&P “CCC-.

  7. The market has started talking of technical glitches. Russia’s credit default swap (CDS) – an insurance against default – rose to nearly 3,000 basis points, compared to 125 basis points in early 2022. There is a high probability that investors in different locations will not receive loan payments/coupons. Likely to be treated as default.

  8. Future payments on Eurobonds are in question. Major index providers called the Russian segment ‘currently non-investable’ and announced plans to exclude Russia from the indices: S&P, MSCI and FTSE for stock indexes, and JPM and Bloomberg to exclude Russia from bond indexes. Will give

  9. The Russian response to Western sanctions was to introduce capital controls that affected external debt payments. Russia could end its oil and gas exports, although a wholesale halt is unlikely. Russia’s Energy Minister remarked, “Russia may close Nord Stream I in retaliation for the shelving of Nord Stream II.” Russia may cease exports of base metals (aluminum, nickel, and/or other rare metals such as titanium) or impose restrictions on fertilizer exports.

  10. Last Saturday, President Putin allowed Russian borrowers to repay foreign loans only in rubles and only to investors who have not imposed sanctions on Russia. Payments to other investors will be credited to special ‘S-Accounts’ but will not be available.