UPDATE 1-Political crisis sends Belarus bonds tumbling

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By Marc Jones

LONDON, Aug 14 (Reuters) – Belarus government bonds fell to their lowest since at least May on Friday after days of widespread protests at President Alexander Lukashenko’s disputed election win and as Europe signalled plans for stringent sanctions.

A sixth day of selling in the last seven sent the country’s 2030 dollar-denominated bonds down as much as 4.3 cents and the rest of its bonds down between 1.5 and 2.5 cents , pricing showed.

It capped the worst few days for Belarus’s markets in six months and came as manoeuvring over Lukashenko’s fate in Brussels and in traditionally ally Moscow, intensified.

Germany’s foreign minister told reporters after a meeting with EU counterparts that sanctions would be imposed on Belarusian officials responsible for cracking down on protests triggered by the disputed election last Sunday.

The EU first imposed sanctions on Belarus in 2004. It tightened them in 2011 over abuses of human rights and democratic standards, including vote rigging.

Many were lifted after Lukashenko released political prisoners in 2016. But an arms embargo remains, as do sanctions on four people over the unresolved disappearances of two opposition activists, a journalist and a businessman years ago.

Russia meanwhile said 32 Russian nationals who were detained in Belarus and accused of being mercenaries had been returned.

Belarus arrested the men last month and said they sought to destabilise the country prior to Sunday’s presidential election. Russia denies it uses mercenaries and has said the men were travelling through Belarus on their way to other countries.

International investment funds were buying up newly issued Belarus bonds as recently as June but Friday’s ongoing selloff has caused heavy losses.

“There is just no visibility on what happens with the politics,” said fund manager GAM’s Richard Briggs, who does not hold any of Belarus’s bonds.

“It does look pretty grim,” he added. “They (bond prices) are not suggesting distress or default or anything like that, but who knows what happens.”

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