Economics
Russia Debt Sanctions Could Send the Ruble Plunging 15%
- ‘Risks remain’ that penalties on OFZs will be implemented
- Worst-case scenario sees yields surging to three-year high
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The ruble could plunge by as much as 15 percent and borrowing costs would spike to a three-year high if the U.S. goes ahead with proposals to impose sanctions on Russian government bonds, according to a new model developed by Citigroup Inc.
Moscow-based analysts at the bank said that such extreme moves would come from a “worst-case scenario” of sanctions that bar foreigners from holding domestic sovereign bonds, also known as OFZs. A move to sanction only new issuance would weaken the ruble by about 5 percent, they said.