Russia had plans to join the international bond market by issuing $3 billion in Eurobonds, and sent out invitations to a lot of reputable European and American banks to partake in the selling. The regulatory authorities in the United States and of the member states of the European Union issued warnings that Buying Russian Eurobonds was against the foreign policies of the countries. Although it was not in conflict with the financial sanctions imposed on Russia.
The high-profile sale has fallen victim to the pressure that the U.S. and the European Union are putting on major banks not to participate. The possibility of Russia shelving the emission of Eurobonds is still growing.
Given that the country’s main lenders are subjects to the aforementioned sanctions, relying on Russian banks could deter the state of western investors. On the other hand, due to the fact that the offering is aimed at European and U.S. buyers, Russia is not confident that Asian (specifically Chinese) banks will lead the selling successfully.
The Eurobonds emission was supposed to partially cover a widening budget deficit, which Russia suffers due to the plunging oil prices. The government is also planning to sell stakes in major state enterprises in hope to draw western banks to act as consultants.
Due to Russia’s plunging export revenues, influenced by the sanctions, foreign currency is in short supply. The Eurobond sell would cover only a limited part of the budget deficit, but more importantly it would have negated to some extent the effects of falling exports. Being shunned by some of the major European and U.S. banks might put Russia’s plan to bring in much-needed foreign currency on hold indefinitely.