EU called on banks to refrain from placing Russian bonds


Brussels warned European banks against the placement of Russian sovereign Eurobonds, reports Financial Times, citing sources in the banks. The EU believes that the funds acquired from the placement of securities can be used “for wrong purposes”.

The sanctions introduced against Russia do not directly prohibit the purchase of Russian sovereign securities, but, according to the FT, the representatives of Brussels in private recommendations to the banks’ management warned them of the risk that the revenues from the placement can go to the structures that are under sanctions.

On February 5, Russian Ministry of Finance submitted applications to 25 foreign banks for a possible placement of sovereign Eurobonds in 2016. In late February it was reported that large US banks refused to participate in the placement of Russian Eurobonds after a warning received from the US authorities. According to The Wall Street Journal, the Finance Ministry and the US State Department issued a special warning that such a transaction would be contrary to the sanctions policy.

If the EU recommendation will convince European banks, Russia may be forced to withdraw from its first attempt in a few years to enter the world debt market, says the FT. Last time Russia sold securities worth $6 billion in 2013, due in years 2019, 2023 and 2043.