November 27 1998, the day the Eurobond market changed for ever. Or was it December 10, 24 or 26? Or even a slew of dates take your pick between January and April 1999? Many involved in the Eurobond market have all these dates firmly marked in their diaries. They are the days on which the coupon payments for the 10 international bonds so far issued by the Russian Federation fall due.
As it stands, there is a high probability that Russia will become the first-ever sovereign issuer to default on a Eurobond issue. Assuming that Pakistan does not get there first. Or Romania. Or Ukraine. Or Korea. Or Indonesia. Or even, to think the unthinkable, Brazil or China. A default by Latin America's biggest country would have a huge knock-on effect on the US, much more so than Russia (more than 400 of the Fortune 500 companies have significant Latin American operations). A Chinese default could be just as traumatic. But with over $140 billion in reserves and enormous problems looming in its banking sector, is it so unthinkable that the world's most populous country could decide simply to close itself off from the west and its creditors?
Russia though is the country on everyone's lips, just two years after its seemingly successful return to the international capital markets.