This insurance was supposed to pay off in case those bonds lost value

Tuesday, March 22nd, 2022

Many money managers who had bought Russian bonds in the past had purchased credit insurance from other companies:

This insurance was supposed to pay off in case those bonds lost value, which they clearly have as a result of sanctions.

Under terms of some of these contracts, some money managers have been able to collect insurance claims. But other insurance contracts stated that in order to be paid, the money manager had to transfer the bonds to the insurer. But the sanctions will not allow the bonds to be transferred! Once again, innovative financial instruments proved to be fragile in ways that were not anticipated.

Comments

  1. Harry Jones says:

    In the world of investing, every “sure thing” is a delusion or a scam.

    The more complicated it is, the less it is to be trusted.

  2. Altitude Zero says:

    An insurance company refusing to pay off because of a technicality? I’m shocked!

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