New On Bloomberg Today

Severstal, the Russian steelmaker is unofficially in default. Officially being in default does require the firms who are owed money to file for that. They have not done so, because they'd rather have their money sent on to them. Severstal's bank has told them that they need to get a permission letter from the U.S. Treasury to get their payment to move forward. 

Severastal is not under sanctions, and neither is the particular oligarch who is its largest shareholder. So no one is quite sure what the hold up is.

Evraz, another Russian steelmaker, did have their payment go through.

But Evraz's majority shareholder is an oligarch who's been sanctioned (he also was the owner of the Chelsea football club in London). No one understand why this one went through.

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Oil is back up. Brent is at $119/barrel, WTI is at $113/barrel.

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Financial contagion is starting to be a bigger worry. Russia has problems with its dollar-denominated debt. The dollar-denominated debt of all  the countries and firms in those countries that are in bad shape is over $500B.

A way to judge what "in bad shape" means is to use an interest rate cutoff. That $500B comes from counting only those countries whose interest rates are more than 10% higher than that of the U.S.

The big one is Belarus, but Ukraine is also near the top of the list. Lebanon (a failed state for other reasons) is another. The rest of the list is Sri Lanka, Zambia (which defaulted in 2020), El Salvador, Tunisia, Ethiopia, Suriname, Tajikistan, Argentina (which defaulted twice this century), Ghana, and Pakistan.

What they're worried about with contagion is that investors start to worry about getting payments from these countries, so they start selling bonds by dropping their asking price, and that pushes up interest rates. So the rate isn't really important; rather it's the measure of problems. 

The problem with international financial contagion is that there really doesn't have to be a well-connected cause for it to happen. It's like a bank run. Except on countries, and their big tax-paying employers.

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Egypt has applied to the IMF for a special loan. This suggests they are having trouble too. Reports are this is from an expected huge drop in tourism: it's a short and straight shot south from Ukraine or Russia, and apparently 40% of tourists in Egypt are from those 2 countries. Who knew??