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Why Putin Is Smiling At The Bond Market's Blockade Of Russia

Tyler Durden's picture


One of the recurring themes the western media regurgitates at every opportunity is that while the western "diplomatic" sanctions against Russia are clearly a joke, one thing that will severely cripple the economy is the capital market embargo that has struck Russian companies, which are facing $115 billion of debt due over the next 12 months.

Recall that not a single Russian Eurobond issue has successfully priced since Russia's peaceful annexation of Crimea. Surely there is no way Russia can afford to let its major corporations - the nexus of its petroleum trade - go insolvent, which is why Putin will have to restrain himself and beg western investors to come back and chase appetiziing Russian yields (with other people's money of course). Turns out this line of thought is completely wrong.

Bloomberg explains:

Russian companies, facing $115 billion of debt due over the next 12 months, will have the funds even as bond markets shut because of the Ukraine crisis, according to Moody’s Investors Service and Fitch Ratings.


Firms will have about $100 billion in cash and earnings at their disposal during the next 18 months, Moody’s said in an analysis of 47 businesses April 11. Almost all 55 companies examined by Fitch are “well placed” to withstand a closed refinancing market for the rest of 2014, it said in a note on April 16. Banks have more than $20 billion in foreign currency to lend as the tensions prompted customers to convert their ruble savings, ZAO Raiffeisenbank said.


The amount of cash on balances of Russian companies, committed credit lines from banks and the operating cash flows they will get is sufficient for the companies to comfortably service their liabilities,” Denis Perevezentsev, an analyst at Moody’s in Moscow, said by phone on April 17.

So, Russia can comfortably extend its Ukraine campaign well into 2015? Truly great news for Kiev, which is already bankrupt, and which is scrambling to get every last bcf of gas it can get its hands on before  Gazprom finally pulls the plug in under a month.

Ah, the miracles of positive cash flow... and how quickly it eliminates any so-called political leverage the bearer of the world's reserve currency thought it may have had, leading ultimately to this.

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Mon, 04/21/2014 - 17:05 | 4680746 LawsofPhysics
LawsofPhysics's picture

That's easy, "counterparty risk"...

and plenty of cash (after selling western government bonds and currency)

Hey 'merica, get your MyIRA, trust us, these bonds are safe.

Mon, 04/21/2014 - 17:07 | 4680756 NotApplicable
NotApplicable's picture

What currency is this debt denominated in? And the cash?

Mon, 04/21/2014 - 17:07 | 4680762 LawsofPhysics
LawsofPhysics's picture

indeed, what is the "value" of something that nodbody wants?

Mon, 04/21/2014 - 17:25 | 4680817 Latina Lover
Latina Lover's picture

The western banksters are compelling Putin to move away from the  Fed Reserve dollar system, seemingly promoting their own demise.  I believe they are deliberately commiting slow suicide to hang failure of their global dollar ponzi scheme around Russia's neck.


Then they can bring in their NWO, aka Feudalism 2.0

Mon, 04/21/2014 - 17:35 | 4680847 Cap Matifou
Cap Matifou's picture

The banksters will beg them to continue the debt money charade, once the Russkies begin to issue debt free money, the way Lincoln did with the original greenbacks.

"If that mischievous financial policy,which had its origin in the North American Republic, should become indurated down to afixture, then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world."

Mon, 04/21/2014 - 17:45 | 4680884 BKbroiler
BKbroiler's picture

What a bunch of nonsense, Putin is fucked.. 


Even a "mild version" of sanctions from the US and European Union would likely cut Russia's economic growth from a projected 2.5% this year to "less than 1% and maybe zero," the ex-minister told a business conference in his home city of St. Petersburg.

Read more: http://www.minyanville.com/sectors/global-markets/articles/crimea-Russia-Economic-Savior-Counts-the/3/17/2014/id/54211#ixzz2zYlVdbA4


Mon, 04/21/2014 - 17:50 | 4680905 Spitzer
Spitzer's picture

Will Putin let these co.s go broke or just sell treasuries to buy the debt ...

Please just sell the Ts Vlad

Mon, 04/21/2014 - 18:07 | 4680941 knukles
knukles's picture

Who the fuck is Counselor to the Western Powers?
The Anti-Christ?

The guy holds all the cards.
While I'm not in any way rooting for him (be like supporting a Democrat like Harry Reid for all the difference it makes) he does hold all the cards and have one massive set of kay-joneies 

Default and the banks default with you.
West forces you to default and it's western banks defaulted upon.

Got gold to buy energy? 

Mon, 04/21/2014 - 18:54 | 4681064 john39
john39's picture

the hidden hand plays the long game... most don't understand the rules, or more importantly, the objective.  but then again, the people who think they are playing with or for the hidden hand are arguably the biggest fools of all...

i think ozzie layed it out best:

... satan laughing spreads his wings...

Mon, 04/21/2014 - 20:08 | 4681222 sunaJ
sunaJ's picture

Putin plays chess and is stalking the West's queen.  Obama plays golf and...well, that's about it.



Mon, 04/21/2014 - 20:20 | 4681251 palmereldritch
palmereldritch's picture

Carl Icahn just tweeted that he wants a seat on the State Department's Board of Directors

Tue, 04/22/2014 - 06:23 | 4681948 gold-is-not-dead
gold-is-not-dead's picture

Russia is silly, if you're a Russian, living outside of Moscow, you need visa approval to get in the city for period longer than few weeks. That's fascist par excellence.

Tue, 04/22/2014 - 07:50 | 4682052 Mountainview
Mountainview's picture

Should be implemented the other way round in Detroit.

Tue, 04/22/2014 - 10:24 | 4682504 N2OJoe
N2OJoe's picture

"What a bunch of nonsense, Putin is fucked.. "

Because we all know Russians are incapable of enduring short-term hardship..


Mon, 04/21/2014 - 22:21 | 4681507 agNau
agNau's picture

"The west's queen"
That would be Obama.

Tue, 04/22/2014 - 00:03 | 4681726 Slave
Slave's picture

Obama plays golf and sucks cock.

Mon, 04/21/2014 - 21:56 | 4681444 jeff montanye
jeff montanye's picture

i'm rootin' for putin.

Tue, 04/22/2014 - 12:02 | 4682827 L G Butz PhD
L G Butz PhD's picture

Actually, it was Terry "Geezer" Butler who wrote that.

Ozzie sang it well though!

Mon, 04/21/2014 - 18:58 | 4681069 mccvilb
mccvilb's picture

Vlad the Wimpaler.

Tue, 04/22/2014 - 05:28 | 4681931 HardlyZero
Mon, 04/21/2014 - 21:03 | 4681333 Wahooo
Wahooo's picture

Let's see ... High stakes finance and we got a billionaire businessman versus a community organizer. This is going to be a slaughter.

Mon, 04/21/2014 - 17:53 | 4680914 logicalman
logicalman's picture

Energy is the ultimate currency.

Russia seems to have plenty.

US, not so much.

Mon, 04/21/2014 - 18:22 | 4680995 Uncle Remus
Uncle Remus's picture

Forbes? Seriously? And speculative bullshit to boot. Jeebus.

Tue, 04/22/2014 - 00:01 | 4681720 Spitzer
Spitzer's picture

He just discovered ZH heh

Tue, 04/22/2014 - 01:11 | 4681804 Keyser
Keyser's picture

Hardly, but I do work in O&G. Another case of shoot first when you see the source. Anyone can google the topic and find another source, except the 25 idiots that down voted the post... Sometimes ZH members are a little too vested in their hated of the system to understand reality when it slaps them in the face... 


Tue, 04/22/2014 - 06:37 | 4681954 weburke
weburke's picture


Ras-putin. the boy is not independent. With cooling waters way out of control, Folks wont prep.

Tue, 04/22/2014 - 01:13 | 4681810 Keyser
Keyser's picture

More cannon fodder... Do a fact check before you throw Briar Rabbit in the briar patch... 


Tue, 04/22/2014 - 11:26 | 4682694 Uncle Remus
Uncle Remus's picture

Suck my dick. That "article" was filler at best. I read deeper stuff in Readers Digest as a kid.

Mon, 04/21/2014 - 18:29 | 4681009 NidStyles
NidStyles's picture

The US actually has plenty if they would just tell the EPA to go kick rocks. Not buying a 4k lb POS SUV would help as well, but you know how them idiots are. They have to look like bad asses at every waking seocnd. 

Mon, 04/21/2014 - 21:59 | 4681455 jeff montanye
jeff montanye's picture

and in their dreams.

Mon, 04/21/2014 - 22:44 | 4681346 magnetosphere
magnetosphere's picture

and the usa is the #2 energy producer by some distance


Mon, 04/21/2014 - 17:58 | 4680927 Fix-ItSilly
Fix-ItSilly's picture

Ask a banker what is more important, food or money, and of course the response is "money".  I prefer food and since Russia has a sizeable trade surplus "money" is subordinated as an immediate issue.

Mon, 04/21/2014 - 18:05 | 4680946 BKbroiler
BKbroiler's picture

That ex-minister is the only reason Russia is in the black. I'd say his opinion counts. 

The ruble is sliding.  Capital is leaving the country at an increasing rate, they're slowly getting blocked out of international trade.  And they will build a new reserve currency?  With who?  The great Iran/China/Inda axis of 3rd world backwardness?  China is imploding, Iran is a fucking caliphate and most Indians still shit out in the open. Some currency that will be, sure people everywhere will be flocking to invest.  I understand not liking the president but going full commie retard is not the answer.

Mon, 04/21/2014 - 18:13 | 4680965 Tengri Temujin
Tengri Temujin's picture

What you think the Western financial system and economies are any better.  Tell that to the mass of unemployed in the EU.  Let me tell you what matters.  A GALLON of gasoline that gets you to work, that runs that tractor to get you food out of the ground, that makes plastics to package your food, that brings that food to you so you dont have to wonder aimlessly looking for food in the hot sun or winter snow, and ultimately that gallon of gas that powers the tank or jet that is protecting your FOOD an OIL.  Eat  your freakin paper shit dollars and use them to stay warm suckers.

Mon, 04/21/2014 - 18:15 | 4680973 BKbroiler
BKbroiler's picture

Let me tell you what matters. blah blah blah

Nope.  What matters is dollars and the giant military behind them.   

Mon, 04/21/2014 - 18:23 | 4680997 TheMeatTrapper
TheMeatTrapper's picture

That military is worn out, tired, pissed off and in no mood to go fight another war for a bunch of Wall Street fucktards. 

Mon, 04/21/2014 - 18:54 | 4681063 dryam
dryam's picture

To BKbroiler:

You are completely retarded.  Enough said.  Your nonsensical, completely ignorant comments aren't even worthy of a comment.  I just wanted to give you feedback so next time you think you have something to offer you'll shut the fuck up.  

Mon, 04/21/2014 - 19:32 | 4681111 BKbroiler
BKbroiler's picture

A little too close to home dryam?  Didn't meant to insult the fam with the whole shitting in the open thing.  Don't worry, form now on I'll only post pro-putin homoerotic fantasies you girls can jerk off to.  Now go get me a squishee.

Mon, 04/21/2014 - 19:32 | 4681141 dryam
dryam's picture

How's it feel being a federal employee spreading propaganda, disrupting sites like ZH, and creating misinformation?

I have to hand it to you, you suckered me in and now bantering with you misdirects others from having real conversation about the truth.


Mon, 04/21/2014 - 19:38 | 4681144 BKbroiler
BKbroiler's picture

Right, for the last 4 years I've been on here spreading government gospel, you got me figured.

The truth is Russia has nothing.  Painted rust.  You think in 20 years they even came close to building something that can rival the US military and economy?   Has everyone on this site lost their mind?  

Mon, 04/21/2014 - 19:44 | 4681158 dryam
dryam's picture

Odd, you just started posting your stupid shit over the past couple of weeks.

It's also odd when someone thinks everyone on a certain website has lost their minds and they continue to post on that website.  Moreover, they give no substantial facts that backup their rhetoric.  You sound like MSNBC.

Mon, 04/21/2014 - 19:47 | 4681170 BKbroiler
BKbroiler's picture

yes, for years I've been waiting for a US-Russia dispute to come along so I could spring into action for uncle sam on ZH.  it's so fucking stupid it's brilliant. 

I need to prove to you nutjobs that the US military and economy are bigger than Russia's?  Let me crack open my copy of OBVIOUS SHIT EVERYONE KNOWS and see what it says.

Mon, 04/21/2014 - 20:02 | 4681207 TungstenBars
TungstenBars's picture

Run back to CNN, Fox and your .gov handlers. Tell them no-one here is buying the crap they (you) are selling. 


In case you really are a paid troll, and not just a completely brainwashed fucktard, please note that you are on the wrong side of history. History has some prevalent characteristics; one of which is that traitors to the people usually end up hung. 

Mon, 04/21/2014 - 20:09 | 4681226 Petrodollar Sys...
Petrodollar System Beneficiary's picture

Do you people actually believe that the US would lose in a fight with Russia? First of all, it would never happen, because the United States wouldn't be so eager to give hegemony to China, who would be pleased to step in afterwards as numero uno. The United States will do everything in their power to make it difficult for Russia to amass power and influence without provoking war. Russia wants to avoid conflict with US, and vice versa. It does them absolutely no benefit, as it would decrease their standing relative to their competition. For as long as possible, the US will maintain general stability (avoid all out war) until they have reached critical mass, and then the world is theirs. The US has the most advanced military in the world (goes without saying), and anything you hear to the contrary is US propoganda to incite fear in the population to justify more military spending. The Chinese have 1 piece of shit aircraft carrier, so their ability to project power is extremely limited. Russia has an aging Navy, decent tanks, lots of nukes, but the truth is that sky control and power projection through navy is what matters most in a world where WW3 will likely never happen. 

Mon, 04/21/2014 - 20:18 | 4681244 TungstenBars
TungstenBars's picture

The US could never win a war against Russia or China. It could never invade either of those countries and survive. As for aircraft carriers..those are comical relics in the 21st century. If there is ever a world war you can bet those on an american aircraft carrier will be the first to be vapourized. It's a rocket world now, and Russia is still #1. 


Anyways, what is important is who has the resources for a war. I believe this has been discussed already before. The US is runnign on debt and has no capabilities outside of the continental US. If anything happens all we will see is the instant death of 10's of thousands of US troops stationed in Asia and Europe, coinciding with a dollar drop leaving the US in a depression the likes of which we have never seen on earth. When the dust settles the US will be lucky to maintain lead influence in N America..

Mon, 04/21/2014 - 21:03 | 4681334 Savyindallas
Savyindallas's picture

That's why we need to invade canada  -Immediately! They have resources. I believe we can kick their ass. 

Mon, 04/21/2014 - 21:21 | 4681369 MeBizarro
MeBizarro's picture

This incoherent rambling on here boggles my mind.  If things get to the point that US tactical carrier groups are 'vaporized' or nuked by Russia, it won't remotely matter who is left standing when the dust settles because we will likely have thermonuclear war and some sort of nculear winter after that.  If enough nukes are exchanged, it would be an extinction event and odds are humanity would be wiped out. 

Mon, 04/21/2014 - 22:31 | 4681519 TungstenBars
TungstenBars's picture

Tactical nuclear war won't go full thermonuclear against cities. Just like all conflict it is an escalation. US carrier groups in foreign seas threatening Russia or China are assumed to be tactical nuke targets. Most bets are the Pentagon not only has contingency plans for losing entire strike groups but expects it to happen (so don't let your kids get sent off to their deaths). 


Losing a strike group will not result in attacking Russian cities with nukes. Unless of course Washington has gone completely off the handle. The former event would still be in the tactical nukes against military targets stage, which need not escalate to attacking cities if the US would back off from aggression in that example. It's meant to deter aggression. 

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