US and EU sanctions banning the trading of new Russian bonds could raise Moscow’s borrowing costs and foreshadow tougher curbs that shut western investors out of the country’s debt market entirely, fund managers have said.
US president Joe Biden on Tuesday announced a ban on participation in the secondary market for any Russian bonds issued after March 1, part of a flurry of new sanctions against Russia, as he accused President Vladimir Putin of launching an invasion of Ukraine. The EU followed suit on Wednesday with its own ban on the sale or purchase of new Russian debt.
US investors were already barred from directly lending to Moscow. A ban on buying new Russia dollar debt has been in place since the annexation of Crimea in 2014 and Biden outlawed participation in the primary market — where new bonds are sold — for rouble-denominated debt last year. But the new curb in effect closes a loophole that allowed western lenders to indirectly finance the Russian state.