The Russian debt market is resilient enough to potentially harsher Western sanctions against Moscow, given a recent decline in foreign investors holdings of Russian debt, the central bank said on Thursday.
The share of foreign investors among Russias OFZ treasury bond holders slumped to its lowest since mid2015 in April, when the United States imposed new sanctions against Russia.
The new sanctions bar U.S. banks from buying Russian roubledenominated sovereign debt from midJune on top of the existing ban on purchasing sovereign Eurobonds directly from Russia.
The potential for harsher sanctions may prompt investors to take extra steps. Nevertheless, even if they become harsher, the overall impact of sanctions is seen to be shortlived and limited due to the strong fundamentals of the Russian market, the central bank said.
U.S. investors were the main foreign holders of OFZs as of April 1, followed by investors from the UK and Belgium.
Foreign investors holdings of OFZ bonds, which Russia uses to plug budget holes, declined by 334.6 billion roubles 4.56 billion from the beginning of 2021 to April 23, the central bank said in a report on financial stability.
Their share slipped to 18.7 as of April 23 from 20.2 at the end of March, the central bank said.
Roubledenominated OFZ bonds used to be popular among foreign investors thanks to their lucrative yields, given Russias investmentgrade ratings. The decline in nonresidents share among OFZ holders had a limited impact…