The Russian corporate bond market is approaching a massive wave of defaults amid a deteriorating economic situation caused by the war against Ukraine and a protracted economic crisis. This was reported by the Foreign Intelligence Service of Ukraine on Thursday, May 14. Due to the declining profitability of bank deposits, Russian citizens had previously flocked to bonds, hoping for higher returns. However, experts are now warning about severe risks of losing these savings.
According to analytical estimates, approximately 25% of the Russian bond market is already in the danger zone for default. This implies that a significant portion of investors may receive neither income nor the return of their initial investment in the event of issuer bankruptcy. The trend toward increasing defaults is intensifying rapidly: 11 bankruptcies of bond-issuing companies were recorded in the first quarter of this year alone. For comparison, that matches the total for the entire year of 2024, whereas 2025 saw 24 such cases.
Experts attribute the deterioration to the consequences of the war and Russia’s overall economic exhaustion. Key factors include the high key interest rate set by the Central Bank of Russia, which restricts business access to credit, as well as an increased tax burden and a sharp drop in consumer demand. Furthermore, the Russian economy is feeling the cumulative impact of sanctions and the transition to a war-time footing, which is stripping companies of the liquidity needed to service their mounting debts.
The situation is expected to worsen significantly by 2026, when Russian companies will need to repay up to 6.6 trillion rubles in debt. This creates additional pressure on the already strained financial system. Analysts suggest that the combination of astronomical interest rates, the drying up of private capital, and the state’s focus on military spending over productive investment is creating a systemic risk. Without access to international markets and with domestic capital becoming increasingly scarce, the Russian corporate sector faces a precarious future. The reliance on internal resources to fund both the war effort and the survival of major enterprises is unsustainable, likely leading to further instability in the coming quarters as the weight of these financial obligations becomes impossible to manage.