Russia’s debt

Russia has stamped on reports that it was seeking to restructure up to $400bn of corporate debt – though not before they sent ripples through international equity and foreign exchange markets. Jitters are understandable. Russia does have foreign corporate debt issues, if not of the magnitude the reports implied. With the banking system still gummed up and commodity prices languishing, corporate defaults are set to multiply.

Quantifying the problem, however, is tricky. While Russia in recent years paid off much sovereign debt, its companies went on a foreign borrowing spree. The central bank’s most recent figures show total foreign currency debt on October 1 2008 was $541bn – a third of gross domestic product – including $43bn of sovereign debt. Some $198bn was bank debt, and $300bn non-bank debt.