Committee defers decision on Russia CDS auction after U.S. sanctions update
2022.06.09 15:47
FILE PHOTO: Coins of one Russian rouble and one Euro are seen in this picture illustration taken April 6, 2022. REUTERS
By Jorgelina do Rosario
LONDON (Reuters) – The EMEA Credit Derivatives Determinations Committee said on Thursday it was deferring a decision over how to hold a potential auction on Russian credit default swaps (CDS) following an update on U.S. sanctions earlier in the week.
The goal is “to allow credit derivatives market participants time to assess the implications that the updated OFAC (Office of Foreign Assets Control) FAQs may have on the ability of market participants to participate in an auction”, the committee said in a statement.
The committee, whose members include Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), Deutsche Bank (ETR:DBKGn), Elliot Management and PIMCO, will meet again on June 10 at 1400 GMT.
The U.S. Treasury Department updated information earlier this week on sweeping sanctions Washington has imposed on Moscow over its invasion of Ukraine, saying that measures in place prohibit U.S. money managers from buying any Russian debt or stocks in secondary markets.
The CDDC panel decided last week that Russia’s failure to pay $1.9 million in accrued interest on a dollar bond would trigger payouts potentially worth billions of dollars.
Russia’s international 2022 bond matured on April 4 and payment of principal and interest due at maturity was not made until May 2. During that period, Russia was obligated to continue to pay these interests.
There are currently $2.54 billion of net notional CDS outstanding in relation to Russia, including $1.68 billion on the country itself and the remainder on the CDX.EM index, according to JPMorgan (NYSE:JPM) calculations.
Russia has been excluded from the global financial system after sanctions imposed by western countries and their allies on Russia following its invasion of Ukraine on Feb. 24.
