By Marc Jones

LONDON, (Reuters) – The costs of Russia’s invasion in Ukraine will be much more apparent next week. There is a likely sovereign default, additional emergency bank measures, and a guaranteed stock market crash if the central banks reopen.

Moscow’s “special operations” against its Soviet neighbor has rendered Russia inaccessible to key financial areas around the world, which is triggering Russia’s worst economic crisis since 1991.

Wednesday could be another low. Two of its bonds in dollar currency are due to be paid $117 million by the government. The government has not indicated that they will, but if it does pay $117 million, it will do so in roubles.

It technically has a 30 day grace period. However, this is minor. This would mark the Bolshevik revolution more than a century back’s first international default.

“Default is quite imminent,” said Roberto Sifon a top analyst at S&P Global (NYSE:) which has just hit Russia with the world’s biggest ever sovereign credit rating downgrade.

Gazprom and Rosneft, state-owned energy giants, have recently made international bond payments. There is still some hope though that around $200 billion in unassigned government reserves might be available.

(Graphic: Russia international debt default looming, https://fingfx.thomsonreuters.com/gfx/mkt/zgvomznxovd/Pasted%20image%201646220845544.png)

Wednesdays could also be very busy due to other factors.

Russia’s Vedomosti Financial newspaper reported that sources from the Moscow Exchange and central bank said this week, local equity and bond trades were being suspended.

In the short term, it would cause chaos. Russia’s large firms that also list on New York or London stock exchanges, experienced international share drops of nearly zero as a result of the crisis. This has been stopped.

Jane Foley, Rabobank’s currency strategist, stated that many banks have Russian assets and want to dispose of them.

They have no other choice than to sit with them. However, if they allow trading to continue, selling might be very persistent.”

(Graphic: plunges as conflict triggers unprecedented sanctions, https://fingfx.thomsonreuters.com/gfx/mkt/klpykbrqgpg/Pasted%20image%201647000011209.png)

RECESSION

The story is not over. Russia’s central banks will meet Friday. They have already increased interest rates by more than 20% to 20%, and introduced capital controls in an effort to prevent financial crises.

JPMorgan (NYSE): Western banks such as JPMorgan now anticipate the economy will plummet 7% in 2012 due to a combination of sanctions damage, bank run concerns and an instant inflation surge resulting from a 40% drop in the rouble.

It is a contrast to the predictions for 3% growth in the first quarter of this year. The peak-to-trough plunge would also be around 12%. This is more than the 10% drop in 1998’s Russian rouble crisis or the 11% losses during the global financial meltdown.

Arthur Budaghyan from BCA Research, chief emerging market strategist said that the CBR could hike rates slightly further. This would be the best assumption for now.

This stage is crucial because it will require additional capital controls to ensure that the financial system remains stable.

Budaghyan stated that it is important to ensure banks function and can process payments. Credit flow must also be maintained so the economy can continue functioning in some way.

(Graphic: Russian stock market plunging far more than during other crises, https://fingfx.thomsonreuters.com/gfx/mkt/xmvjoekmepr/Pasted%20image%201645779548050.png)