(This content was produced in Russia, where the law restricts
coverage of Russian military operations in Ukraine.)
By Elena Fabrichnaya
MOSCOW, Jan 31 (Reuters) - Russia's central bank
recommended on Tuesday that retail investors convert their
foreign currency Eurobonds into local "replacement bonds" as 5.7
trillion roubles ($81 billion) of investor holdings remain
frozen by Western sanctions.
Since Russia launched what it calls its "special military
operation" in Ukraine last February, foreign payment companies
have blocked rouble transactions due to sanctions, making it
harder for Russian companies to pay holders of their Eurobonds.
In response, President Vladimir Putin signed a decree last
July allowing Russian companies to issue "replacement bonds",
which are denominated in foreign currencies such as Eurobonds
but are repaid in roubles.
Several major Russian companies, including state-run gas
giant Gazprom and oil firm Lukoil , have
substituted their Eurobonds in this way.
"In practice, we see an increase in the number of companies
that have decided to issue replacement bonds," said Olga
Shishlyannikova, who heads the central bank's financial
intermediaries department.
At the moment, investors who hold Eurobonds issued by
Russian companies are blocked from receiving payments. By
switching to replacement bonds, retail investors will be able to
unlock these assets, Shishlyannikova said.
"If all Russian-origin Eurobonds are substituted, then for
retail investors this will allow more than 50% of their assets,
which are now blocked, to be unblocked and allow them to start
managing them," she said.
Shishlyannikova added that 20% of the 5.7 trillion roubles
of investor holdings blocked in foreign infrastructure belonged
to retail investors.
The conflict in Ukraine and ensuing barrage of Western
sanctions have upended some sectors of Russia's economy, cutting
its biggest banks from the SWIFT financial network, curbing its
access to oil markets and freezing half of its $640 billion
worth of gold and foreign exchange reserves.
While the government and central bank have acknowledged
"difficulties", Moscow says its economy is resilient and that
sanctions have boomeranged against the West by driving up
inflation and energy prices.
(Reporting by Elena Fabrichnaya; Writing by Caleb Davis;
Editing by Gareth Jones)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.