U.S. Investors Barred From Buying Russian Debt, Stocks in Secondary Market

Beyond its ban on new-issue purchases, the U.S. Treasury Department has prohibited American money managers from buying any Russian debt or stocks in secondary markets. The announcement was posted on the department’s website.

"Consistent with our goal to deny Russia the financial resources it needs to continue its brutal war against Ukraine, Treasury has made clear that U.S. persons are prohibited from making new investments in the success of Russia, including through purchases on the secondary market," a Treasury spokesperson said.

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The ban does not include the hundreds of billions of dollars of assets already circulating, according to Reuters. U.S. investors may sell or continue to hold assets that they already own, under the Treasury’s new rules. Also, buying shares in U.S. funds that contain Russian debt or equities is still permitted.

These latest sanctions on Russia over its invasion of Ukraine extend to all Russian debt and all Russian firms, including those that have been named in the sanctions.

Since Russia’s invasion in late February, western funds have rid themselves of Russian assets. In January, Russian government and corporate debt totaled about $472 billion. The combined market cap of Moscow’s main stock exchange has fallen about 15 trillion rubles, or $259 billion.

In May, the Treasury moved to push Russia into default on its sovereign bonds, effectively cutting off its ability to make payments on dollar-denominated debt through U.S. financial institutions.

"The surprising new thing here is that trading of all existing debt has now been prohibited, at least for U.S. citizens," Seaport Global emerging market credit analyst Himanshu Porwal told Reuters. "We have been trading some of the names like Lukoil very actively, but now the U.S. accounts will be unwilling to transact."