Belarus bonds slump amid talk of new sanctions

Hard-currency sovereign bonds make up nearly a third of Belarus' $18.5bln external debt

  

LONDON- Belarus sovereign dollar bonds tumbled on Monday amid talk of new EU sanctions in an attempt to put more pressure on President Alexander Lukashenko over last month's forced landing of a Ryanair passenger plane in Minsk.

The benchmark 2030 bond slumped some 4 cents in its biggest fall since the peak of global market COVID angst in March last year, while the 2031 bond issued in June last year matched the decline and hit a record low, Tradeweb data showed.

Hard-currency sovereign bonds make up nearly a third of Belarus' $18.5 billion external debt and has a relatively low debt-to-GDP burden.

Support from Russia provided a cushion against the geopolitical backlash from the disputed 2020 election and bloody crackdown on protests in the country. Yet Lukashenko's increasing reliance on long-time ally Moscow for funding also raised some risks for investors. 

"More and more investors will look at the relationship between Russia and Belarus," said Trieu Pham, an EM debt strategist at ING.

"The more Belarus is isolated from the West, it will depend on more financial support from Russia and that will drive the pricing on Belarusian euro bonds."

The European Union will on Monday impose travel bans and asset freezes on 86 Belarusian individuals and companies, but will leave the decision on when to impose economic sanctions to leaders. 

Diplomats and the Austrian foreign ministry said on Friday that the bloc had reached a deal to ban new loans, a ban on EU investors from trading securities or buying short-term bonds and a ban on EU banks from providing investment services. EU export credits will also end.

However, EU governments still need to agree the measure on a political level. 

(Reporting by Marc Jones and Karin Strohecker, additional reporting by Susan Mathew in Bengaluru, editing by David Evans) ((karin.strohecker@thomsonreuters.com; +442075427262; Reuters Messaging: karin.strohecker.reuters.com@reuters.net))


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