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Despite Washington's sweeping sanctions in recent months,
Americans were still allowed to trade hundreds of billions of
dollars worth of assets already in circulation on secondary
markets.
The Treasury said in guidance published on its website on Monday
that the ban extends to all Russian debt and that all Russian
firms' shares are affected, not just those of ones specifically
named in sanctions.
"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
on Tuesday.
The rules do still allow U.S. investors to sell or continue to
hold Russian assets that they already own. Buying shares in U.S.
funds that contain Russian debt or equities will also still be
possible.
Western funds have already dumped Russian assets en masse since
the war in Ukraine started.
According to Morgan Stanley, Russian government and corporate
debt on the international markets added up to just over $472
billion at the start of the year, making it one of the largest
emerging market asset pools behind Mexico, Indonesia and Turkey.
The combined market cap of Moscow's main stock exchange
meanwhile, is currently around 35 trillion roubles ($588.24
billion) down from over 50 trillion in January.
The latest Treasury move surprised some analysts, especially
because it was posted in the Frequently Asked Questions section
of the department's website, rather than announced with the most
recent round of sanctions.
"The surprising new thing here is that trading of all existing
debt has been now been prohibited, at least for the U.S.
citizens," said Seaport Global emerging market credit analyst
Himanshu Porwal.
"We have been trading some of the names like Lukoil very
actively, but now the U.S. accounts will be unwilling to
transact."
The United States and its allies have imposed several rounds of
measures on Moscow since its Feb. 24 invasion of Ukraine.
Russia calls its assault a special operation to demilitarize
Ukraine. Kyiv and its Western allies say it is a baseless
pretext for an unprovoked war.
($1 = 59.5000 roubles)
(Additional reporting by Rodrigo Campos in New York; Editing by
David Gregorio and Cynthia Osterman)
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