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Western banks take interest in Russian debt securities — finance minister

March 17, 2016, 16:21 UTC+3

"Despite all the restrictions, we will continue with our plans of external borrowings," finance minister Anton Siluanov says

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Russian Finance Minister Anton Siluanov

Russian Finance Minister Anton Siluanov

© Anna Isakova/Russian State Duma Press Office/TASS

MOSCOW, March 17. /TASS/. Russia will go to the market of external borrowings despite the limitations of Western regulators, Finance Minister Anton Siluanov said on Thursday during a public lecture at the Financial University.

"Despite all the restrictions, we will continue with our plans of external borrowings," Siluanov said.

"Our colleagues somehow believe that by introducing such sanctions, they only hurt Russia. But they also hurt their investors. Moreover, it is unclear who is hurt more..." the official added.

"Many European, many US banks viewed and continue viewing our debt securities with high satisfaction in conditions of low rates on European and US markets because Russia is an attractive country among emerging markets with its low debt and fairly predictable economic policy," the minister said.

"The same European financiers and European bankers would happily invest money out of negative interest rates existing there into the good interest in the Russian economy, in its debt securities," Siluanov said.

Western governments are preventing participation of their residents in Russian offerings, Siluanov added. "I regret saying certain restrictions exist introduced by the US and slightly softer by European authorities; they do not recommend participating in these Russian placements," the minister added.

On Monday, Financial Times reported that "Brussels is urging European banks to steer clear of Russia’s first sovereign bond issue since the imposition of western sanctions over Ukraine, creating fresh doubts about the viability of the offering".

"Although the EU’s sanctions do not explicitly prohibit purchases of Russian government debt, EU officials have privately echoed Washington’s warnings that the proceeds from an offering could be misused, according to two people familiar with the guidance," Financial Times reported.

In February, the Wall Street Journal reported, citing informed sources, that the US government recommended large US banks to refrain from buying Russian government bonds.

According to the publication, the US banks received this recommendation from the State Department and the US Treasury, in response to Russia’s inquiry about possible participation of the banks in the placement of Russian securities. In particular, the authorities indicated that similar operations would contradict the sanctions policy toward Moscow.

Russia’s budget for 2016 provides for the possibility of borrowing on foreign market up to $3 billion.

In early February, Russia’s Finance Ministry sent requests to 25 foreign and three national banks to participate in placement of Russia’s Eurobonds in 2016. In particular, Russia invited such banks as Bank of America, Citigroup, Goldman Sachs, J.P. Morgan and Morgan Stanley.

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