PIMCO $2.2 trillion in assets. Set To Lose Billions If Russia Defaults On Foreign Debt The bond trading giant could lose big

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It looks like BlackRock and its ESG preacher CEO Larry Fink aren't the only ones on Wall Street who are set to lose billions on their Russian assets.

While plenty of American firms have recorded massive losses on Russian assets, PIMCO, the bond trading giant founded by Bill Gross decades ago, has somehow managed to lose money on both its holdings of Russian bonds, as well as its CDS.

How is this possible? As we explained earlier this week, many fear that even if Russia defaults on its foreign currency sovereign debt, western sanctions might prevent CDS holders from collecting on their winnings.



PIMCO had $1.5 billion in Russian government bonds on its books. Then early this year, it sold $1.1 billion in CDS, with at least five PIMCO funds selling the CDS to investors, leaving PIMCO holding the bag if the Russians default. So, if Russia defaults, not only will PIMCO be left holding worthless bonds (which have already rapidly depreciated in recent weeks), but it will be on the hook for the CDS payments, the FT reports.

Of course, in the interim, PIMCO receives payments from the CDS holders. The payments are like insurance premiums. In anticipation of a Russian default (something that Wall Street expects with growing certainty), PIMCO has already started with the write-downs.

Russia last week made an interest payment on one of its ruble-denominated bonds, but said the money wouldn't reach foreign investors, in accordance with a Moscow ban on the central bank sending foreign currency abroad.

Two interest payments on Russia’s foreign currency debt, which is covered by CDS, are due on March 16.

Of course, any losses would pale in comparison to PIMCO's $2.2 trillion in assets.