As Russia teeters on the brink of a historic default, foreign investors in the country's debt have few palatable options to recover their money: bet on costly legal action, trust bilateral agreements will stand, or sit on their hands.
Foreign creditors would typically try to band together to negotiate, go to court or in some cases seek arbitration in cases of default, but Western sanctions in the wake of Moscow's invasion of Ukraine and the peculiarities of Russian sovereign bonds make those options hard at the moment, lawyers said.
Some $40 billion of Russian sovereign debt issued in dollars and euros is outstanding, with about half of that held by foreigners. Under terms of most of that debt, Moscow must pay investors in the currency in which the bonds are denominated.