loomberg) — A growing number of Wall Street banks are willing to trade Russian bonds that were once viewed as untouchable.
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JPMorgan Chase & Co. and Bank of America Corp. are among several banks that have offered to facilitate transactions in corporate and sovereign debt on behalf of clients, according to people familiar with the matter who asked not to be identified.
Banks are now willing to broker transactions after the Treasury Department said it’s not a violation of US sanctions for individuals to wind down their positions, adding clarity on an issue that’s confused many people in the market. Bank of America sent a note to investors last week saying the trades are for those seeking to exit Russian debt holdings.
In the aftermath of the Ukraine invasion and stiff US sanctions, many banks withdrew from Russia and stopped dealings in the nation’s assets. That left some investors stuck with deeply distressed positions. As recently as last month, some were unable to find a broker.
Lawyers say that investors have always been allowed to sell their positions under the US sanctions rules, but the topic has been so contentious that many brokers simply refused. Given the recent guidance from Office for Foreign Assets Control, there’s now more confidence in the market about the ways that banks can deal in Russian assets without breaking the rules.
Barclays Plc and Jefferies Financial Group Inc. have also offered bids to investors, Bloomberg reported last week. Reuters reported earlier on Monday that JPMorgan, Bank of America and Citigroup Inc. were active in the market.
Representatives for JPMorgan, Bank of America and Citigroup declined to comment.
OFAC granted a license last month authorizing transactions needed to exit a position in Russian debt or equity. The license, which expires Oct. 20, also gave approval to purchase securities if it’s part of the disposal process.
Russian debt prices have rebounded in recent weeks as trading increases and locals look for assets to buy with money coming in from energy exports. The 10-year government bond is trading at 39 cents on the euro, up from the lows of 16 cents at the end of June, when banks had stepped back from trading.
(Updates with Citigroup declining to comment in antepenultimate paragraph.)
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