Sanctions over the war in Ukraine have sent investors fleeing
The number of foreign investors holding Russia’s government bonds has dropped to an almost 10-year low, it was reported last week.
The share of non-residents holding ruble-denominated sovereign debt (OFZs) decreased from 19.1% on February 1 to 17.4% on February 25, according to data from the National Settlement Depository cited by RBC.
According to the Bank of Russia, the last time foreign investment was at this level was in December 2012.
Foreign investors rushed to sell off government bonds and shares after Russia launched an invasion of Ukraine and faced a barrage of sanctions from the US and the EU. Washington banned US financial institutions from conducting any transactions with Russian OFZs or foreign currency sovereign Eurobonds issued after March 1, 2022, among other measures. Some $400 billion of the nation’s reserves were also frozen abroad.
On February 24, the government suspended OFZ auctions for two weeks. Russia’s Finance Ministry had been planning to attract at least 700 billion rubles (roughly $7 billion) through OFZs in the first quarter of 2022.
Moscow suspended interest payments to foreign investors holding Russian government bonds and company shares last week, in an attempt to prevent the withdrawal of funds from the financial market and mass sales of Russian securities.
