Russia Should Foment a Bond Market Revolution
Russia doesn't need banks holding its hand to raise capital.
Photographer: Jason AldenRussia would like to tap the international capital markets for funds by issuing new bonds. Investment banks jockeying to manage the sale, though, have been warned off by the authorities in the U.S. and Europe because Russia is still subject to economic sanctions. This raises an interesting question: What if Russia, or any borrower, just bypassed the middlemen and sold its securities directly to investors?
Governments and companies still sell international bonds the same way they have since the 1963 deal worth $15 million for the Italian highways authority Autostrade, which many people regard as the first true Eurobond issue: A borrower needing money hires a gang of investment banks to handle the fundraising; that syndicate handles the paperwork, finds investors willing to buy the debt, and underwrites the issue ensuring that the borrower gets its money even if the sale falters.