NEW YORK: Several major Wall Street banks have begun offering to facilitate trades in Russian debt in recent days, according to bank documents seen by Reuters, giving investors another chance to dispose of assets widely seen in the West as toxic.
Most US and European banks had pulled back from the market in June after the Treasury Department banned US investors from purchasing any Russian security as part of economic sanctions to punish Moscow for invading Ukraine, according to an investor who holds Russian securities and two banking sources.
Following subsequent guidelines from the Treasury in July that allowed US holders to wind down their positions, the largest Wall Street firms have cautiously returned to the market for Russian government and corporate bonds, according to emails, client notes and other communications from six banks as well as interviews with the sources.
The banks that are in the market now include JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Barclays Plc and Jefferies Financial Group Inc, the documents show.
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The return of the largest Wall Street firms, the details of the trades they are offering to facilitate and the precautions they are taking to avoid breaching sanctions are reported here for the first time.
Bank of America, Barclays, Citi and JPMorgan declined to comment.
A Jefferies spokesperson said it was “working within global sanctions guidelines to facilitate our clients’ needs to navigate this complicated situation.”
A source close to Deutsche Bank said the bank trades bonds for clients on a request-only and case-by-case basis to further manage down its Russia risk exposure or that of its non-US clients, but won’t do any new business outside of these two categories.
STRANDED ASSETS
Some $40 billion of Russian sovereign bonds were outstanding before Russia began what it calls a “special military operation” in Ukraine in February. Roughly half was held by foreign funds. Many investors got stranded with Russian assets, as their value plummeted, buyers disappeared and sanctions made trading hard.
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