Official: Russia may sell US bonds, prohibit purchase of OFZ bonds

MOSCOW, Feb 5 (PRIME) -- Russia may cut its investment in U.S. treasuries in retaliation if Washington expands the sanctions on its sovereign debt, Anatoly Aksakov, head of the financial market committee of the parliament’s lower house State Duma, told PRIME late on February 2.

On January 30, U.S. listed 114 politicians, including the entire Kremlin administration, Prime Minister Dmitry Medvedev and all Russian ministers, 96 businessmen and firms with an annual income of over U.S. $2 billion for possible sanctions. Treasury Secretary Steven Mnuchin told the Congress said that new sanctions against Russia were to be introduced soon.

But on February 2, Bloomberg quoted a report of the U.S. Department of the Treasury that the sanctions against Russia’s sovereign debt may cause retaliation against interests of the U.S. and hurt interests of the U.S. investors.

Aksakov said in case of expansion of the U.S. sanctions, U.S. investors will be prohibited from buying Russian OFZ bonds and Eurobonds. “It is obvious that the securities are usually sold with a discount in this case, they become less interesting at the market…The major response here is that we will not undertake this discount, (and we will) support the yield at the levels that are interesting for investors,” Aksakov said.

Besides that, Russia is one of the major investors in the U.S. treasuries. “We have invested more than U.S. $100 billion in the U.S. treasuries. It is obvious that we may also reduce investment in the U.S. treasuries if such decisions are made, Russian money will not work in interests of the U.S. economy,” he said.

The sanctions will also hurt the U.S. investors who prefer Russian securities because of their yield and a low risk, but the sanctions will not significantly hurt the Russian economy “as we in general have budget surplus, and this money are not crucial for us,” he said.

Moscow could also substitute the external borrowing with internal sources, he added.

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