Limited Impact Seen For Japan Of Russia's Potential Default
A panel of financial institutions and investors says Russia has effectively defaulted on its bonds.
Market sources say the impact on Japan's financial system is likely limited, although the country's major lenders have exposure due to their Russia-related loans.
Moscow was a month late paying principal and interest on a dollar-denominated bond that matured on April 4. A Credit Derivatives Determinations Committee says that Russia did not add interest accrued in that period in its eventual payment, meaning that Russia is in default.
Russia's central bank says investors in other countries held foreign-currency-denominated bonds worth about 20 billion dollars at the end of last year.
The market sources say a Russian default would have a limited impact on Japan's financial system because the holdings of Russian bonds by Japanese institutions are not large.
It is a different story for Russia-related loans, however.
Japan's three biggest financial groups say their combined outstanding credit related to Russia was more than 1 trillion yen, or 7.7 billion dollars at the end of March.
Mitsubishi UFJ, Sumitomo Mitsui and Mizuho booked a combined 2.7 billion dollars in losses in their Russia-related business for fiscal 2021.