Topic: Eurobonds

Bloomberg reports on the unusual structure of Russian sovereign debt, noting that bonds issued after the 2014 Crimean invasion included "alternate payment" clauses allowing for payment in rubles if sanctions occurred. This is described as a form of "insurance" for Russian misbehavior, funded by Western investors who often tout their ESG (Environmental, Social, and Governance) credentials. Russia's ability to avoid default despite being cut off from Western financial networks is analyzed.

Russia successfully transferred $117 million in U.S. dollars to settle coupon payments on two Eurobonds, avoiding a potential default. The U.S. Treasury Department authorized the transaction through JP Morgan and Citigroup, revealing that sanctions do not currently prohibit such debt settlements from non-sanctioned accounts.

The hosts discuss the potential implementation of "Eurobonds" to stabilize the European economy following Italy's debt downgrade. They clarify that Eurobonds are a specific financial instrument not limited to Europe. The segment also notes a "dead fish" handshake between Nicolas Sarkozy and Angela Merkel during their recent meeting on the crisis.

Portugal's president criticized Moody's Investors Service after the agency downgraded the country's debt to junk status, calling for a European-run ratings agency. The hosts question the influence of Moody's and Standard & Poor's, noting their failure to accurately rate mortgage-backed securities prior to the 2008 financial crisis.