Financial Market

U.S. bars investors from buying Russian debt, stocks on secondary market

WASHINGTON/LONDON, June 7 (Reuters) – The U.S. Treasury Department has banned U.S. money managers from buying any Russian debt or stocks in secondary markets on top of its existing ban on new-issue purchases, in its latest sanctions on Moscow over its invasion of Ukraine.

Despite Washington’s sweeping sanctions in recent months, Americans were still allowed to trade hundreds of billions of dollars worth of assets already in circulation on secondary markets.

The Treasury said in guidance published on its website on Monday that the ban extends to all Russian debt and that all Russian firms’ shares are affected, not just those of ones specifically named in sanctions.

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“Consistent with our goal to deny Russia the financial resources it needs to continue its brutal war against Ukraine, Treasury has made clear that U.S. persons are prohibited from making new investments in the success of Russia, including through purchases on the secondary market,” a Treasury spokesperson said on Tuesday.

The rules do still allow U.S. investors to sell or continue to hold Russian assets that they already own.

The Treasury move surprised some analysts, especially because it was posted in the Frequently Asked Questions section of the department’s website, rather than announced with the most recent round of sanctions.

“The surprising new thing here is that trading of all existing debt has been now been prohibited, at least for the U.S. citizens,” said Seaport Global emerging market credit analyst Himanshu Porwal.

“We have been trading some of the names like Lukoil very actively, but now the U.S. accounts will be unwilling to transact.”

Russian bonds slump due to Western sanctions

The United States and its allies have imposed several rounds of measures on Moscow since its Feb. 24 invasion of Ukraine.

Russia calls its assault a special operation to demilitarize Ukraine. Kyiv and its Western allies say it is a baseless pretext for an unprovoked war.

($1 = 59.6250 roubles)

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Additional reporting by Rodrigo Campos in New York; Editing by David Gregorio and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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