Russia Says Its Debt Markets Can Withstand the Shock of Sanctions

Russia’s borrowing costs will only suffer a short-term spike if the U.S. goes ahead with a proposal to impose sanctions on the country’s sovereign debt, according to central bank Governor Elvira Nabiullina.

After the initial shock, yields on ruble government bonds, or OFZs, will stabilize around 30 basis points to 40 basis points higher, Nabiullina said in a speech on Thursday in Russia’s parliament. Foreign investors, who currently hold 33 percent of the debt, will be replaced with local buyers, she said.