Trading in Russian debt stalls as US spells out ban


Trading in Russian government bonds has ground to a halt after the US Treasury moved to bar American investors from buying the country’s debt in the secondary market.

Fund managers said most banks had all but ceased transacting in Russia’s government bonds after the Treasury on Monday clarified that earlier sanctions blocking investments in Russia applied to existing as well as new debt. Russian dollar bonds fell in price by about 3 cents on the dollar to roughly 25 cents on Tuesday as investors and brokers scrambled to interpret the new guidance.

“All the major bank dealers are paused,” said a US hedge fund manager who holds Russian bonds.

“Consistent with our goal to deny Russia the financial resources it needs to continue its brutal war against Ukraine, Treasury has made clear that US persons are prohibited from making new investments in the success of Russia, including through purchases on the secondary market,” a Treasury spokesperson said.

The new guidance marks the latest intensification of the dramatic shutdown of Russia’s financial markets which followed the invasion of Ukraine in February. Under the rules, US firms are not allowed to buy Russian securities, including corporate or government bonds or equities, but may continue to hold them or sell them to a non-US counterparty.

The Treasury guidance comes as Russia slides towards its first sovereign default since 1998, following a separate US Treasury move last month to block US investors from receiving bond interest or repayments from Moscow. The Russian government has a 30-day grace period in which to find a way to get payments due on May 27 to western investors in order to avoid a default which could trigger legal action from bondholders seeking to recover their investment.

The Credit Derivatives Determinations Committee, a derivatives industry panel, last week ruled that Russia’s failure to pay a slice of extra interest on one of its bonds will trigger payouts on credit default swaps, insurance-like contracts used to protect against debt defaults.


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