Biden to bar U.S. banks from rouble debt primary market

LONDON (Reuters) – President Joe Biden will issue an executive order on Thursday authorizing the U.S. government to sanction any sector of the Russian economy and barring U.S. banks from participating in the primary markets for rouble-denominated bonds.

It does not however prevent them from buying the debt in secondary markets, Reuters reported.

Here is a selection of quotes on the subject:

TIMOTHY ASH, BLUEBAY ASSET MANAGEMENT

“You can imagine a situation where a U.S. financial institution likes Russian debt, wants to buy it, but just let’s primary issues happen and then comes in and picks up bonds in the secondary market.

Someone just made the analogy that if you prevented U.S. institutions from buying this debt in the primary market, but then allowed them to pick it up in the secondary market it would be like a 16 year old getting an adult to buy alcohol from the liquor store, and giving it to the teen around the back.”

DMITRY DOLGIN, ING BANK, MOSCOW

“The positive is that non-residents can still participate in the secondary OFZ market and don’t need to get rid of securities they have already purchased. But the negative is no one can guaantee that this will be the case. U.S. investors could see the current package of sanctions as a window of opportunity to get out of Russia.

I don’t see interest rates being raised just because of these sanctions. It will make sense only if the rouble weakens sharply.”

ARTHUR BUDAGHYAN, BCA RESEARCH

“The situation is escalating… economic sanctions are a pretty easy call if there is not going to be military action.”

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