European governments are increasingly likely to take a harder line with Russia over sanctions, according to Greylock Capital Management LLC’s Chief Executive Officer Hans Humes, a move that will make it harder for companies to access debt capital markets.
European leaders are meeting tomorrow in Brussels to weigh increasing pressure on Russia after the shooting down of Malaysia Airlines Flight 17 over rebel-held territory in eastern Ukraine. President Barack Obama’s administration had already tightened sanctions prior to the downing of the flight to punish Russia for its interference in Ukraine.
“The U.S. did a good job of pushing sanctions early and we are the ones at the forefront,” Humes said in a Bloomberg Television interview. “This is really a European decision now and the signs I’m seeing is that the Europeans will take a much harder line.”
There has been some selling of Russian assets and debt costs are increasing 30, 40 50 basis points, said Humes. Companies are having a much tougher time accessing capital markets and if it continues they will lose the ability to interact, he said.
Even as German Foreign Minister Frank-Walter Steinmeier said the European Union’s 28-member states have to “increase pressure” on Russia, he doesn’t expect a decision on further sactions to be made tomorrow. European and U.S. penalties have already crimped Russia’s $2 trillion economy, which is teetering on the brink of a recession. The Micex Index slid for a sixth day, losing 2.7 percent to 1,384.50 at the close in Moscow, producing a loss of 4.2 percent since Feb. 28, a day before Putin’s intervention in Crimea.