ABSTRACT
This chapter considers the causes, structure and system of the management of Russia's sovereign debt. The dramatic change in funding policy was the result of several factors affecting both the revenue side of the equation and the relative cost of domestic as opposed to international financing. On the assumption that foreign financial investors will probably give Russia a wide berth for the foreseeable future, foreign direct investment will be the important source of external private sector support for the economy. Some highly leveraged institutions that have been important investors in emerging market securities suffered large losses or were even dissolved as a result of the Russian debt restructuring, and faced higher margin calls. In compliance with federal law, indebtedness under the internal foreign currency bonds was assigned to category of sovereign foreign debt. Russia's deal with private bankers closes the chapter on a cataclysmic default that rocked financial markets worldwide and paved the way for its return to capital markets.
