‘Wake-Up Call’
One bond manager at a large U.S. mutual-fund company, who asked not to be named citing company policy, said the firm has been working to sell Russian debt and wasn’t inclined to return to the market in the near future. The person, who hadn’t heard of any government attempts to influence money managers, said the company perceives risk in Russia as having increased significantly.
“This is a real wake-up call that there are in the former Soviet Union still a lot of moving parts and more risk than meets the eye,” said Deino at Invesco, a mutual-fund manager with $787 billion in assets as of March 31. “This is going to result in a decisive increase in the cost of doing business in Russia, in the risk premium, and that’s not going to go away for years.”
Deino is the lead manager of the Dublin-registered Invesco Emerging Markets Bond Fund, which holds $255 million.
Western Asset Management, the bond investing unit of Legg Mason Inc., has been making “incremental” purchases of Russian assets that are less exposed to sanctions, Robert Abad, who helps oversee about $53 billion of emerging-market debt at Western, said in a telephone interview.
Geneva Accord
“It’s all about the sensitivity of each sector to potential sanctions,” said Abad, who favors telecommunications and mining. “No one is here to gamble. We all have a fiduciary responsibility to asses risk in the most prudent way.”
The Geneva statement called for all illegal armed groups in Ukraine to be disarmed, seized buildings to be returned to their legitimate owners and occupied public places to be vacated. An amnesty will be granted to protesters. A mission from the Organization for Security and Cooperation in Europe will help oversee the measures. A new constitutional process will aim to establish “a broad national dialogue.”
Russia’s Micex Index increased 2.2 percent at 3 p.m. in Moscow, and the Ukrainian Equities Index rose 0.9 percent. The MSCI Asia Pacific Index added 0.3 percent. The yield on Russia’s February 2027 bond slid 18 basis points to 8.99 percent, while the ruble retreated after its biggest gain this month yesterday. Financial markets in the U.S., U.K., Germany, Hong Kong and Australia are among those closed for a holiday.