Russian MinFin trying to return investors to new bonds issued by sanctioned banks
MOSCOW. Aug 20 (Interfax) - Russia's Finance Ministry is preparing a solution that will allow Russian investors to invest in new bonds issued by banks sanctioned by the U.S. and EU, Deputy Finance Minister Alexei Moiseyev told Interfax.
International sanctions prohibit rating agencies to assign long-term debt ratings to sanctioned banks. Such banks include VTB , Gazprombank , Russian Agricultural Bank (RusAg) , the Bank of Moscow , which are all under EU and U.S. sanctions; SMP Bank and Bank Rossiya, which are under U.S. sanctions; and Sberbank , which is under EU sanctions.
Russian investors, including pension funds, have rigid criteria for ratings assigned to an issuer by international ratings agencies. This means that pension funds and other regulated financial organizations are currently unable to buy new bonds from the sanctioned banks.
"That's the problem as it current stands. We are now preparing a solution for these banks with the Central Bank and will release it in the next few days. It will be temporary. It will not be a replacement of ratings," he said, adding that experience shows that using exclusively Russian ratings is not permissible.
The Central Bank is not commenting on the issue.
Under the pressure of U.S. and EU sanctions, the domestic debt market is becoming one of the main sources of funding for banks. After sanctions were announced, however, not a single bank entered the Russian bond market.
The Russian authorities decided to extend a moratorium on the transfer of pension savings to non-state pension funds, which experts say cut pension funds' investments in the bond market considerably. According to unofficial estimates, non-state pension funds were involved in 50% of new corporate bond issues.
