Bloomberg: Kazakhstani companies buy out Russian OFZs blocked by sanctions from investors

Kazakh financial companies are buying Russian government debt at a deep discount from investors who are unable to exit the market due to sanctions and other restrictions. This is reported Bloomberg.

Agency sources said that in recent months, some Kazakh brokerage companies and banks have bought or made offers for Russian sovereign securities, including federal loan bonds (OFZ). Registering a debt with a Kazakhstan clearing center enables buyers to receive coupon and principal payments.

The workaround allows Kazakh firms to make quick profits for themselves and clients while some international investors are stuck with billions of dollars of ruble debt. Multiple restrictions prevent foreigners from receiving coupons and principal, but domestic investors can receive payments domestically.

The Kazakh regulator uses bond prices in the Russian market to determine whether companies can record capital gains on their books.

According to the Moscow Exchange, in Russia OFZ securities with a maturity of 10 years have recovered almost to par. This indicates that investors do not expect losses. Back in August, when Bloomberg reported that firms, including Barclays Plc, contributed to an increase in debt trading volumes, financial institutions offered bids in the region of 20-25 kopecks per ruble.

Significant Russian market assets owned by non-residents from both unfriendly and friendly countries remain frozen in type C accounts. According to the Central Bank, the share of foreigners in the OFZ market remains at about 18%, having reached 2.7 trillion rubles in October. Non-residents started carry out off-exchange transactions on the Russian securities market at the end of June.

Daria Erozbek