JPMorgan and BofA among banks facilitating exit from Russian bonds

A growing number of Wall Street banks are willing to trade Russian bonds that were once considered “untouchable,” according to Bloomberg.

JPMorgan and Bank of America are among several banks that have offered to facilitate trades in corporate and government debt on behalf of clients, according to people with knowledge of the matter who spoke on condition of anonymity.

Banks are now willing to broker trades after the U.S. Treasury Department said it is not a violation of U.S. sanctions to liquidate individuals’ positions, providing clarity on an issue that has confused many in the market. Bank of America sent a note to investors last week, saying the trades were for those looking to exit their holdings in Russian debt.

In the wake of Russia’s invasion of Ukraine and tough US sanctions, many banks pulled out of Russia and stopped trading in the country’s assets. This has left some investors stranded, with deeply troubled positions. Just last month, some could not find a broker.

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

Barclays and Jefferies Financial Group have also offered offers to investors, Bloomberg reported last week. Reuters reported on Monday that JPMorgan, Bank of America and Citigroup are active in the market.

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

OFAC granted permission last month to approve trades required to exit a position in Russian debt or equities. The permit, which expires on October 20, also gave approval to buy securities if it is part of the exit process.

Russian debt prices have rebounded in recent weeks as trading picks up and locals look for assets to buy with money coming in from energy exports. Russia’s 10-year government bond is trading at 39 cents to the euro, down from a low of 16 cents in late June when banks pulled out of trading.