Swiss Bank UBS Cuts Value of Russian Bonds to Zero, Sparking Margin Calls

Swiss bank UBS Group AG triggered a cascade of margin calls on Thursday, after slashing the value of Russian debt to near zero.

According to Bloomberg, which cited people familiar with the matter, UBS downgraded the lending value of certain Russian bonds to zero, and as a result is requesting that some of its clients increase securities or cash in their portfolio. Even though Russian sovereign bonds are still trading at around 50 cents on the dollar, the Swiss bank’s latest move suggests that it will no longer accept the debt as collateral.

For those investors that are unable to meet the added requirements, their securities risk being liquidated at market value, explained the people to Bloomberg. As of 2020, UBS held about $447 million worth of Russian banking products, such as guarantees and loans to Russia.

While Russian bonds suffered extensive losses, the country’s equity markets plummeted by the most on record, some falling by as much as 45%— amounting to losses of more than $250 billion. Similarly, the Russian ruble also slumped to a historic low before paring back losses.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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