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JPMorgan and BofA among banks to resume trading in Russian bonds

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JPMorgan Chase & Co. and Bank of America Corp. are among several banks that have offered to facilitate corporate and sovereign debt transactions on behalf of clients, according to people familiar with the matter who asked not to be identified.

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Banks are now willing to trade after the Treasury Department said it is not a violation of US sanctions for people to reduce their positions, adding clarity on a subject that has caused widespread market confusion.

Bank of America sent a note to investors last week saying the transactions are for those looking to exit Russian debt holdings.

In the wake of the invasion of Ukraine and harsh US sanctions, many banks withdrew from Russia and stopped dealing with the nation’s assets. That left some investors stuck in deeply at-risk positions and, just last month, some were unable to find a broker.

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Lawyers say investors have always been allowed to sell their positions under US sanctions rules, but the issue has been so contentious that many brokers have simply refused to do so.

Given recent guidance from the Office of Foreign Assets Control (OFAC), there is now more market confidence in the ways that banks can trade Russian assets without breaking the rules.

Barclays Plc and Jefferies Financial Group Inc. have also made offers to investors, Bloomberg reported last week. Reuters earlier reported on Monday that JPMorgan, Bank of America and Citigroup Inc. were actively participating in the market.

Representatives for JPMorgan, Bank of America and Citigroup declined to comment.

OFAC issued a license last month that authorizes the transactions necessary to sell Russian debt or equity positions. The license, which expires on October 20, also gives approval to buy securities if it is part of the sale process.

Russian debt prices have rallied in recent weeks as trade picks up and locals seek assets to buy with money from energy exports. The 10-year government bond is trading at 39 cents on the euro, down from a low of 16 cents at the end of June, when banks pulled out of trading.

Source: Gestion

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