Sergey Shvetsov: Eurotrans default threatens the Russian bond market and digital financial instruments
The Chairman of the Supervisory Board of the Moscow Exchange called for a parliamentary investigation into the situation with the Trassa gas station network
Quick Look
- A default by Eurotrans could undermine confidence in the bond and DFA markets in Russia.
- Sergei Shvetsov of the Moscow Exchange called for a parliamentary investigation, comparing the situation to the collapse of Enron, to prevent massive abuses in the market.
AI-generated summary
Why It Matters
Eurotrans entered technical default in March, and by September went into actual default on all bonds. The total debt is 36.8 billion rubles, most of which belongs to individuals.
The default of Eurotrans, the operator of the large independent network of Trassa gas stations, could be the end for the entire Russian bond market and digital financial assets (DFAs). Chairman of the Moscow Exchange Supervisory Board Sergei Shvetsov said this at the forum “Digital Finance - a New Economic Reality,” Frank Media reports.
He recalled that the company had “a good rating, excellent independent directors, heads of departments, economist Mikhail Khazin as an independent director, rector of one of the St. Petersburg universities, excellent reporting, regular dividends.”
However, none of this worked. At some point, Eurotrans simply borrowed tens of billions of rubles from citizens, and then “went into the shadows, stopped paying, and did not provide any information.” According to Shvetsov, what happened requires a parliamentary investigation, otherwise “there will be a line of people wanting to do the same.”
“The market for bonds bought by individuals will come to an end along with the digital financial market,” the chairman of the Moscow Exchange Supervisory Board is confident. According to him, what happened is reminiscent of the situation with the collapse of the American Enron, after which the Senate brought the investigation to an end and adopted anti-corruption legislation.
“If parliament doesn’t take up an investigation into this case and we don’t use it to work out the same things that the American market did in its time, then with a high probability we won’t grow in the DFA market,” Shvetsov concluded.
Eurotrans began to allow technical defaults in March, against the backdrop of problems with the availability of fuel that began in the country. By the beginning of September, the company went into virtual default on all ten bond issues, and on the 7th, many top managers of the company were arrested on suspicion of stealing fuel intended for the security forces.
The company's total debt is estimated at 36.8 billion rubles. The vast majority of bonds—92 percent—are owned by individuals. Experts do not believe that they will be able to get anything for the securities, because there are no people willing to buy them.
Open Questions
- Will a parliamentary investigation be initiated?
- What is the recovery rate for private investors?
