The risk that a Russian Eurobond default will rock world markets, and particularly emerging-market debt spreads, may be small but it could grow, analysts said yesterday.

Global markets have so far viewed President Boris Yeltsin's surprise sacking of the Prime Minister, Mr Yevgeny Primakov, as a domestic political crisis. But some analysts worry it may delay a desperately needed loan programme from the International Monetary Fund, leaving cash-strapped Russia to default on $1.6 billion (€1.5 billion) in Eurobond payments due this year. No rated sovereign state has yet defaulted on a Eurobond.

"The big fear is that should the $4.5 billion of IMF funding to Russia be delayed by the political crisis, the risk of . . . a default on Eurobond payments this summer will rise and the cost of capital will go up for all," said Deutsche Bank's head of emerging markets strategy, Mr Geoffrey Dennis.