Several major Wall Street banks have resumed offering transactions in Russian bonds recently. This is reported by the Reuters news agency based on bank documents. This gives investors another chance to sell these debt securities, which are generally considered “dangerous” in the West.
Most US and European banks withdrew from trading in Russian securities in June. In addition, the US Treasury Department banned American investors from buying Russian securities. This measure is part of the economic sanctions against Russia for invading Ukraine.
In July, however, the ministry issued guidelines allowing US holders of Russian securities to scale down their positions. Since then, the largest banks on Wall Street, including JPMorgan, Bank of America, Citigroup, Deutsche Bank, Barclays, and Jefferies, have cautiously resumed trading in the Russian government and corporate bonds.
A Jefferies spokesperson said the bank is “working within global sanctions guidelines to meet our clients’ need to navigate this complicated situation.” A source close to Deutsche Bank stated that this bank only trades bonds for clients on a request-by-case basis to reduce its exposure to Russia further.
About $40 billion in Russian government bonds was outstanding before Russia invaded Ukraine in February. Foreign funds held about half. Many investors could not sell their Russian investments as their value plummeted, buyers disappeared, and sanctions made trading virtually impossible.
To ease the pain for these investors, US regulators have allowed banks to resume facilitating and settling transactions in Russian debt since July 22 if this helps US investors reduce their positions.
However, the transactions remain subject to many regulations, and the banks also require additional paperwork from customers to prevent them from getting Russian debt papers on their books. As a result, the settlement would also take longer than usual. Reuters could not identify the buyers of the Russian bonds.