Foreign investors sold about 200 billion rubles ($3 billion) worth of Russian ruble-denominated bonds since the announcement of the latest U.S. sanctions last month that created uncertainty about how vulnerable the market is to more penalties.
According to the country’s central bank, non-residents now own about 31 percent of the government’s outstanding ruble securities, known as OFZs
First Deputy Governor of the Bank of Russia, Ksenia Yudaeva, said at a news briefing in Moscow on Wednesday that the figure was down from a record of more than 34 percent earlier this year, Rossiyskaya Gazeta reported.
Russian sovereign bonds weren’t targeted in the harshest American sanctions on Russian assets and individuals to date, the surprise U.S. move in early April raised concern among some investors that the OFZ market could be hit next if relations between Washington and the Kremlin continue to deteriorate.
The Treasury has softened its position since the April penalties by outlining a path to lift curbs on companies controlled by Russian billionaire Oleg Deripaska.
While most of the selling came immediately after the penalties, it continued into May “due to a broader pullback from emerging-market assets,” Yudaeva said.
Russia’s central bank said in a report last week that foreigners dumped record volumes of OFZs on April 9-10, the two trading days after the sanctions hit. The Russian government is putting together a special entity to better manage the fallout from sanctions in the future, Deputy Finance Minister Vladimir Kolychev said in an interview last week.