Sharp sales of Russian debt will not be
The fact that a fairly large amount of Russian securities totaling $1.3 billion. owns the largest pension Fund CalPERS, from the point of view of the effects can be interpreted in different ways.
On the one hand, the fact that the Fund did not rid the data of Federal loan bonds and shares of Russian companies, with the continued sanctions pressure, may indicate that the imposition of restrictions on operations with Russian debt may be delayed and not take place.
Another plus of this phenomenon we have experienced is the strengthening of the ruble and, subsequently, the reduction of inflation in the period when these securities are bought by foreign funds.
If you evaluate the overall trend in this market segment, we can see that not all non-residents withdrew funds from the OFZ market. According to various estimates, about 26% OFZ is on the balance sheets of non-residents. They will hold these securities until alternative accommodation with comparable yield, and taking into account country risk.
This option may be U.S. Treasury bonds because the yield on them is growing rapidly because of the fed rate hike – now it is possible to get already of the order of 3.12% per annum. If this trend will continue and it is likely to continue, after some time, it will be interesting to keep our paper based on the country risk that will provoke a gradual deliverance from them. The risk of this factor is obvious – the weakening of the ruble and rising inflation.
In the medium term there is no reason to expect major sales of Russian debt, as sanctions yet faded into the background and country risks of Russia remain unchanged.