Yields on Belarussian bonds exploded from 12% to 25% in the space of a few minutes this morning following reports that President Alexandr Lukashenko raised the prospect of restructuring the former Soviet republic’s external debt. As Bloomberg reports, the 2018 bonds collapsed from over 90c to 65c even as Lukashenko said Russian President Vladimir Putin was prepared to provide $500 million of aid if the situation gets “very difficult.” However, two hours later  - following the collapse in bonds - Lukashenko clarified his remarks... "Please calm down," he said, "Belarus has enough money to pay its debts in full." It turns out he meant refinance... not restructure.

Belarussian bonds...

The first impression...

“The likelihood of the actual bond restructuring is quite high as it could be one of the conditions for any future Russian support,” Vladimir Osakovskiy, an analyst at Bank of America Corp. in Moscow, said by e-mail.

“There is strong political incentive to continue to repay external debt in order to keep alternative, other-than-Russia refinancing options open.”

The slow response...

As Bloomberg reports, Belarus Leader Says He Meant ‘Refinance’ Not ‘Restructure’ Debt

“Please calm down,” Belarusian President Alexandr Lukashenko says during annual news conference in Minsk, addressing bondholders.

Belarus has enough money to pay its debts in full