Russia And Ukraine: the danger posed to EM corporates by a rise in global interest rates

The 'Hidden Debts' Of Russia And Ukraine That Could Make Them More Exposed Than Any Other Country In The World

by MATTHEW BOESLER

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The recent escalation of military tensions in between Ukraine and Russia have caused the currencies of both countries to dive against the dollar. Firms in these countries with large proportions of external debt issued in dollars are now facing an increase in the value of their debts relative to the value of their assets, increasing somewhat the risk of default.

In short, when the dollar strengthens, dollar liquidity decreases, and credit risk goes up.

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