Sovereign Debt Default

Dated events

1. Aug. 17, 1998 · Russia devalues the ruble and defaults on its domestic debt
   The Russian government announced it would not pay back its short-term bonds on time and let the ruble lose much of its value against the dollar. Banks and investment funds around the world that had lent money to Russia suddenly worried they would never get it back, and people inside Russia scrambled to exchange rubles for dollars or buy anything that would hold its value. The crisis spread globally and contributed to the near-collapse of a giant US investment fund called Long-Term Capital Management.
2. Dec. 23, 2001 · Argentina's interim president announces suspension of foreign debt payments
   Argentina's interim president announced the country would stop making payments on its foreign government debt, the largest such failure in history at that time. Banks had already frozen people's savings accounts, and Argentines rushed to buy US dollars and physical goods because they feared the local peso would soon lose value. Over the following weeks, Argentina abandoned its fixed exchange rate, and within months the peso lost about three-quarters of its value against the dollar.
3. March 9, 2012 · Greece secures bondholder deal in largest sovereign debt restructuring
   Greece finalized a deal that effectively wiped out a large portion of what it owed to private lenders, totaling about €100 billion in losses for bondholders. This mattered because investors holding government bonds from other struggling European countries like Spain and Italy worried the same thing could happen to them. In the months that followed, borrowing costs for several European governments swung wildly as people debated whether the euro currency itself could survive.
4. May 22, 2020 · Argentina defaults for the ninth time as $500M bond payment grace period ends
   Argentina missed a payment on bonds governed by foreign law, officially entering default again while it tried to negotiate new terms with its creditors. The Argentine peso had already been falling steadily, and ordinary Argentines were once again buying US dollars on the black market and stockpiling goods to protect their savings. A restructuring deal was eventually reached a few months later, but strict currency controls remained in place.
5. May 19, 2022 · Sri Lanka falls into default on its foreign debt for the first time
   Sri Lanka formally failed to make payments on its foreign government bonds after running out of US dollars needed to pay for imports and debt. The country had already run out of fuel and medicine, and people faced hours-long lines for basic necessities, which sparked massive street protests that eventually forced the president to flee. The crisis showed how a country burning through its dollar reserves could spiral from a financial problem into a full-blown humanitarian emergency.

Assets named in this scenario · 4

Gold · Gold FuturesiShares 20+ Year Treasury Bond ETFiShares MSCI Emerging Markets ETFUS Dollar (USD)

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