Russia Finds Way Back to Eurobond Market Riddled With Potholes
- Lingering sanctions, local settlement risks cited as concerns
- VTB collects $5.5 billion bids but leaves some funds wanting
Russia’s complicated return to the international bond markets may help plug a budget deficit, but it’s done little to burnish the nation’s profile with bond investors in the U.S. and Europe.
The deal, which had attracted almost $6.3 billion of bids as of Tuesday, is being managed solely by the investment banking unit of sanctioned VTB Group and may leave out money managers in Europe and the U.S. whose internal compliance departments forbid them from doing business with blacklisted dealers. The prospectus said there could be “no assurance” the bonds would be eligible for major international clearing systems, such as Euroclear Bank SA and Clearstream Banking SA, on which many foreign funds rely. Instead, they will be settled on Russia’s own National Settlement Depository.