Russia says buyback will prevent discrimination against Russian bondholders -Ifax (updated)

Flint

30/03/2022 11:24

(Adds details, quotes, background)
    March 30 (Reuters) - Russian Finance Minister Anton Siluanov
said on Wednesday that a proposed sovereign Eurobond buyback
would stop discrimination against Russian bondholders, who he
said were not able to access funds sent to settlement system
Euroclear, Interfax reported. 
    Russia has offered to buy back dollar bonds maturing next
week in roubles in a move seen by analysts as helping local
holders of the $2 billion sovereign issue receive payment, while
easing Moscow's hard-currency repayment burden.  urn:newsml:reuters.com:*:nL2N2VW0W1
    The finance ministry offer on Eurobonds maturing on April 4,
Russia's biggest debt payment this year, follows Western moves
to tighten sanctions against the country over its actions in
Ukraine and to freeze Moscow out of international finance.
    "This is because we see money coming into Euroclear
successfully reaching foreign holders, money on our debts,"
Interfax quoted Siluanov as saying. "And settlements are frozen
for Russian resident holders."
    Euroclear did not immediately respond to a request for
comment.
    "So in this case we have offered to settle directly with our
residents in roubles, so as not to discriminate against our
security holders and have proposed the possibility of buying
back our debt from Russian residents," Siluanov added.
    The finance ministry did not say how much of the issue is
owned by foreign investors, but a Russian source familiar with
the process said that the bulk of the Eurobond due on April 4 is
split among Russian holders. 
    The rouble initially crumbled after the sanctions, plunging
by as much as 40% against the dollar since the start of 2022,
but has since recovered some ground and was trading at around 83
to the dollar on Wednesday  RUBUTSTN=MCX .
    Although that is some way off levels of around 75 before
Russia began what it calls a special operation in Ukraine, there
were signs that the buyback may be popular among Russian
bondholders. 
    "Some Finam clients have those Eurobonds in their portfolio
and they plan to take part in the finance ministry's buyback,"
said Dmitry Lesnov, head of Finam brokerage's client service
development department. 
    "The benefit of this decision may be that clients receive
certainty on their positions and will be able to receive
payments on assets, in spite of restrictions, introduced by
European depositories Euroclear and Clearstream," Lesnov said. 
    The bondholders should submit requests to sell their
holdings to the National Settlement Depository between 1300 GMT
on March 29 and 1400 GMT on March 30. 
    Bondholders who do not sell their Eurobonds under the
voluntary offer will be paid in U.S. dollars on April 4, another
source familiar with the buyout process said. Russia has made
other dollar coupon payments earlier this month.  
    Russia's next deadline is on March 31, when a $447 million
payment  RU011428878=  falls due. On April 4, it is also due to
pay $84 million in coupons on a 2042 sovereign dollar bond
 RU076747385= .  

 (Reporting by Reuters; Editing by Guy Faulconbridge, Mark
Trevelyan and Alexander Smith)