Belarus government bonds trended lower as President Alexander Lukashenko’s regime faces new EU sanctions after it intercepted a Ryanair flight to arrest a dissident, causing international outrage. Belarus’ $3.6bn of dollar bonds, which traded above par in February, tumbled as investors are concerned about potential “Venezuela-style” bans on the trading of Belarusian securities that could hinder bondholders’ exit. Belarus’ USD bonds fell with its 6.875% 2023s down 1.72 to 98.89, yielding 7.58% and its 6.378% 2031s were down 1.76 to 87.84, yielding 8.22%.
Little actual trading was reported, with brokers quoting indicative prices at even steeper declines of 5-6%. The EU agreed to wide-ranging sanctions targeting Belarus’ financial, oil, and potash sectors. Such measures are predicted to significantly harm the economy and to potentially undermine the government’s creditworthiness. “The assumption is they will sanction primary issuance following the Russia example,” said Timothy Ash of BlueBay Asset Management, making reference to the April US sanctions barring Americans from purchasing new Russian government securities. “What’s unusual is the possibility of a ban on trading securities. Then it’s Venezuela-style. People won’t want to be locked into holding these bonds.” Venezuela has been restricted by US sanctions since 2017, barring the trading of Venezuelan debt and shutting the market off to foreign investment.
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