Remember when major Chinese property developer Evergrande defaulted on its payments? Imagine that... but worse.
Background: Russia is becoming pretty isolated from the rest of the world. So, Russia's said it plans to pay its creditors from "unfriendly countries" in rubles or euros... instead of the currency the debt is due in.
What happened: The agencies that determine a country's creditworthiness like Moody's and S&P say they'll be considering those payments as cause for default.
What else: They've also downgraded Russia's debt from investment grade to junk grade... and yup, that's as bad as it sounds.
💡Defaulting on loans can have a really negative impact on an economy - whether it be a big company or a country.
💡 Remember when major Chinese property developer Evergrande defaulted on its payments? We saw global stock markets drop - even the ASX!
💡 So, if a country defaults on its debt payments, it can lead to an economic disaster. And, if banks and other countries have exposure to Russian debt, we could see knock-on effects around the world.
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