Experts: new US sanctions will cause 10% of investors to withdraw from Russian government bonds

New US sanctions that may be imposed on the Russian national debt may lead to an outflow of 8-10% of investors from Russian sovereign debt bonds, according to the results of a study conducted by the Analytical Credit Rating Agency (ACRA), reported TASS.

Analysts believe that the introduction of new sanctions for the purchase of the Russian national debt will significantly reduce the investor base, which will lead to a strong increase in the cost of borrowing for the Russian government.

"Assuming that the geographical distribution of possible holders roughly corresponds to the distribution of current holders, we estimate the potential for a drop 8-10% of volume compared to the beginning of 2018," the survey reads.

At the same time, the experts of the Analytical Credit Rating Agency note that in the most likely scenario the US sanctions will affect the behavior of investors in American market and to a much lesser extent in others.

Moreover, according to the ACRA, a real decrease in the external demand for Russian government bonds could be observed after the previous round of sanctions in April 2018.

"By early July, the volume of bonds held by non-residents decreased by 5.4%. The main decrease was in ruble-denominated OFZs (Russian coupon-bearing Federal Loan Bonds)," the agency's experts note.

Earlier, the US announced the new sanctions against Russia, which will limit the export of goods to Russia. This concerns the goods that may be associated with national security (for example, electronic devices and their components, including those used in the aviation industry). In addition, the bill, already submitted to the US Congress, suggests freezing the assets of the Russian VEB, Sberbank, and VTB banks in the US.

Sanctions, which have been called "draconian" by Kremlin, have already hit the ruble exchange rate and the shares of leading Russian banks. Russian Prime Minister Dmitry Medvedev called the new US sanctions a declaration of an economic war.

  Russia, US sanctions on Russia, USA, Dmitry Medvedev