LONDON -The EMEA Credit Derivatives Determinations Committee (CDDC) has been asked on Monday whether a potential failure to pay occurred on Russia’s hard-currency bonds, possibly bringing payout on billions of dollars in default insurance a step closer.
Russia made a payment due on April 4 on two sovereign bond in roubles rather than the dollars it was mandated to pay under the terms of the instruments.
Credit Default Swaps (CDS) are a way of insuring the buyer against exposure to specific risks, in this case Russia defaulting on its sovereign debt.
The process starts with a market participant, usually an investor who has bought such protection, asking the CDDC to decide whether a potential failure to pay event has happened.
If the committee decides that a credit event has happened, the payout will be triggered.
Investment bank JPMorgan said in a note on Monday that there were currently $3.43 billion of net notional Russia CDS to be settled, including $2.48 billion from single name and the remainder from CDS indexes.
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(Reporting by Karin Strohecker; editing by Sujata Rao and Alex Richardson)