US Investor On Russian Sovereign Debt Sanctions: Moscow Immunized From Such Measures

WASHINGTON (Pakistan Point News / Sputnik - 23rd February, 2022) The United States' sanctions on Russia's sovereign debt are more evolutionary than revolutionary given that Moscow has immunized itself from such measures, Gary Korolev, CEO of Sovereign Wealth Management, told Sputnik.

"Russia has partially immunized itself from such sanctions since 2014 when they really hurt," Korolev said. "Given Russia's cash flow positive situation they are not too reliant on foreign debt issuance. These sanctions are going to bite but they are more evolutionary rather than revolutionary."

Earlier on Tuesday, US President Joe Biden said the United States is imposing new sanctions on the Russia's sovereign debt due to Moscow's actions in Ukraine. Biden explained the United States is implementing comprehensive sanctions on Russia's sovereign debt, meaning that Russia's government will be cut off from Western financing and will not be able to raise money from the West nor trade in its new debt on US or European markets.

"There's not a lot of detail about them, but in the past Russian debt was sanctioned by the West in the initial public offering however it could be held bought and sold in the secondary market in many situations," Korolev said. "Now it looks like it may not be legal to hold Russian debt whether in the Primary or secondary markets."

Korolev noted that this is negative for financing of the Russian economy, however, it is positive that it is discouraging further levering up the economy thereby reducing debt dependence.

"It also encourages creation of other financing avenues for Russian sovereign debt which are not reliant on the West," he said.

Korolev also noted that there will not likely be any significant impact on the global economy from the Western sanctions.

On Monday, Russian President Vladimir Putin signed decrees recognizing the independence of the Donetsk and Luhansk people's republics. Under newly signed treaties, Moscow will ensure their security of the Russian-speaking republics.

The decision followed a deterioration of the situation on line of contact between Ukraine and the breakaway republics. Russia has repeatedly denied any intention of invading Ukraine.