Sanctions, What Sanctions? Russian Credit Risk Collapses To 4-Year Lows

Tyler Durden's picture

After more than three years of US sanctions (and almost a year of constant attacks from the western media) Russian credit risk has collapsed to its lowest level since September 2013.

As Bloomberg notes, high demand for Russia’s dollar-denominated assets is driving the cost of the country’s credit-default swaps back near record lows...

Investors with a bullish view on the nation’s debt sell the default protection and collect regular payments for the instruments rather than buying the country’s dollar bonds and receiving interest.

After sanctions caused a dearth of new dollar securities, CDS have become an increasingly popular way for investors to gain exposure to Russia, according Societe Generale SA’s Rosbank PJSC unit.

While Russian 10Y bond yields have tumbled back to 4.00% - the lowest since the election, Chinese bond yields have exploded higher (up almost 100bps to 3.7% - the highest since Dec 2014).

Perhaps Rex Tillerson was right after all - despite the liberal media's desperation to paint him as yet another 'friend of Putin' - when he questioned the efficacy of US sanctions on Russia this week during his confirmation hearings...

The long-serving executive said the Trump administration needs to review the efficacy of the sanctions and judge whether there might be better ways to try to constrain, or potentially woo, the Kremlin.


"Sanctions, in order to be implemented, do impact American business interests,” Mr. Tillerson said in response to questioning. "When sanctions are imposed, they are, by design, going to harm American business."


"In protecting American interests.…sanctions are a powerful tool. Let’s design them well... Let’s ensure those sanctions are applied equally.”

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Centerist's picture

Lift the ban on Saigas Mr. President.

BorisTheBlade's picture

An effective solution to supply overhang on the used cars market:

AVmaster's picture

Leftards being leftarded..

Centerist's picture

I'm just glad that I got my x39 models before the ban.

Ghordius's picture

that's one part of the story: that Russia's reply to those "sanctions" is a huge... MEH

that includes Turkish tomatoes, which Moscow does not need, as it just announced

the other part was the US and UK request at the previous G7 for more sanctions against Russia

to which the French replied with a "Non", the Italians with a "No" and the Germans with a "Nein"


N.B.; the Russian National Bank is buying USTs, at the moment. the net effect is mostly domestic, but it is relevant, internationally

TheSilentMajority's picture

Toothless sanctions winning again!

Bai Suzhen's picture

In protecting American interests.…sanctions are a powerful tool.

OK, Rex.  Got it.  Just one more thing.  Can you tell me again exactly whose interest you guys are protecting?


Sudden Debt's picture

going against America is good for the economy... lesson learned.


you go with America and they'll fuck you. 


It's like when you would have a violent, drug addicted, untrustfull, flat broke "friend"

no... you know... unless you're stupid... that this "friend" can't really be trusted and one day, he'll steal from you.

Grandad Grumps's picture

Looks to me as if the decline in crude oil price a couple of years ago was not the attack on Russia that the lying propagandist press claimed.

PrivetHedge's picture

Indeed, it just took the economy out of Saudi and bits of the US.

Jubal Early's picture

This is another warning shot by the money changers to Putin:  Don't advance or support Assad's advance to al Tanf and the Syria/Iraq frontier or else we will sink your economy.

Israel has dibs on that part of Syria, it was conquered by Israel's ISIS army and it is as much a part of Israel as Golan is now.

silverer's picture

One problem with your statement. The money changers have sunk the US economy, not the Russian economy. US debt to GDP = 108%. Russia debt to GDP = 16%. Year 2016 Russia's stock market outperformed all others. Check out the MICEX index for the past 10 years. Hopefully you followed Obama's advice and got out of Russian equities before you made all that money. Russian markets are dropping lately, correcting as they should, while US markets continue to receive billions a month from the money changers buddies in the central banks, blowing the bullshit false non existent "productivity based" (lol) profits higher. The only productivity the US has is a fucking printing press.

silverer's picture

Russians are the new Spartans.

PrivetHedge's picture

Sanctions against such a large, complete country were always going to backfire.

The morons who are steering the US toward the rocks have made Russia far stronger and more independent.

Which is good for The World PLC.