Russia bans coupon payments to foreigners holding rouble bonds

[MOSCOW] Foreign investors are effectively stuck with their holdings of rouble-denominated bonds, known as OFZs, after the Russian central bank put a temporary halt on coupon payments and a major overseas' settlement system stopped accepting Russian assets.

The National Settlement Depositary (NSD), a Russian version of the world's biggest settlement systems, Euroclear and Clearstream, said it was limiting payment options on Russian securities for foreign individuals and companies, as well as a right to transfer such securities, in line with a central bank request.

On Monday (Feb 28), the Bank of Russia ordered depositories and registries operating on the securities market to freeze security sales by foreigners. It did not specify how long the curb would last.

The move to shut down trading in Russian assets are part of wider measures by Moscow to shore up its financial system after Western countries levied a raft of economic sanctions to punish Russia for its invasion of Ukraine.

Belgium-based Euroclear said in a note on Tuesday that it will no longer accept the rouble as a settlement currency, effectively shutting off an exit route for overseas investors.

Euroclear said the NSD had blocked its accounts as a result of the central bank measures.

"To the extent legally permissible, you should wire out any remaining long balances in roubles as soon as possible," it said.

Euroclear said it would immediately disable its account at its Russian correspondent bank, Dutch group ING. REUTERS