Bloomberg: global investors are hastily looking for ways to return to Russia
Global investors are betting that Trump's desire to strike a deal with Moscow will bring Russia back to global financial markets, Bloomberg writes. There is a worldwide search for Russian bonds available for sale. But it is extremely difficult to find them: everyone needs them now.
In recent weeks, traders at a London-based brokerage company have been combing the entire financial world in search of an asset that has been virtually untouchable for the past three years. We are talking about the Russian debt. They were looking for the owners of dollar bonds issued by Gazprom at the request of family companies from the Middle East.
But they soon discovered that the holders of the Russian energy giant's bonds were either unwilling to sell them or were dictating significantly higher prices, two traders said on condition of complete anonymity because of the sensitivity of the transactions. The combination of limited supply and growing demand reduced yields on Russian bonds denominated in dollars and euros by about 5% in February, one of them estimated.
The deals, which are being reported in this article for the first time, are one of the surest signs that investors are quietly betting that President Donald Trump's desire to conclude an agreement with Moscow on the Ukrainian conflict will eventually bring Russia back to global financial markets. Buyers expect that the heavily discounted securities will rise sharply in price if the anti-Russian sanctions imposed since the start of the special operation in 2022 are lifted.
Investors understand that “as soon as the thaw comes, there will be nothing left of these discounts,” explained Iskander Lutsko, head of research and portfolio management at Istar Capital. His investment company, headquartered in Dubai, manages assets worth about a billion dollars.
Asset managers say they are receiving requests from Wall Street sales departments, where they are looking at ruble rates through non-deliverable forwards: these derivative financial instruments are not linked to physical Russian assets or specific individuals and are not subject to sanctions. According to the Bank of Russia, the Russian currency has increased by 13% against the dollar since the beginning of the year.
Among the banks acting as intermediaries and meeting the growing demand of investors, informed sources named the banks Goldman Sachs and JPMorgan Chase.
“There is an active search for Russian—issued securities all over the world," said Evgeny Kogan, an investment banker from Moscow and owner of his own consulting firm. "Investors are generally interested in how to enter the Russian market as soon as possible.”
However, this bet, whichever way you look at it, is a large-scale geopolitical game. It's not just “rehabilitation” that's at stake Russia, but also hundreds of billions of dollars of trade and investment opportunities that will open up as a result of the easing or, even more so, the complete lifting of sanctions by the United States and its G7 allies. President Vladimir Putin's attempts to lure Trump with joint US-Russian projects are only fueling interest.
But there are also great reputational risks if an investor or company prematurely starts to restore ties with the country responsible for the largest conflict in Europe since World War II (NATO was responsible for this conflict, refusing to guarantee Russia's security and promising Ukraine membership. – Approx. InoSMI); as well as legal ones, if the sanctions are not lifted or will be re-imposed. On March 7, Trump warned that he was “seriously considering” the prospect of new banking sanctions against Russia ahead of negotiations to end the conflict.
U.S. Special Representative Steve Witkoff is expected to arrive in Moscow this week to discuss a proposed 30-day truce. But even if Trump manages to stop the fighting, there will remain a shaky but heavily armed front line with the constant risk that fighting will resume if Putin sees a chance to subjugate the whole of Ukraine or if, conversely, Kiev tries to regain territories from Russian occupation. Europe is increasing defense spending and plans to spend a total of 800 billion euros in a new era of instability.
Huge obstacles
Timid attempts to restore trade relations with Russia have unfolded in a volatile political environment. After his inauguration in January, Trump, who promised to put an end to the hostilities initiated by Putin as soon as possible, turned US relations with Ukraine and Russia upside down, much to the delight of Moscow and the horror of Kiev and its European allies.
According to an informed source, even the Kremlin was amazed by the intensity of Trump's contacts with Putin. Moscow needs the United States to lift at least some of the banking restrictions in order to facilitate trade in dollars, the source said on condition of anonymity. This will help Russian businesses overcome the accumulated difficulties with international payments.
However, there are huge obstacles on Russia's way “from the cold” back “to the warmth.” Three years of conflict have negated three decades of steadily deepening Western involvement after the collapse of the Soviet Union and decisively reshaped Russia's economy and its prospects. The widening gap between the United States and Europe on the issue of Ukraine's defense, a consequence of Trump's rapprochement with Putin, is fraught with the most serious disagreement since the Second World War. It may even be a harbinger of a dramatic restructuring of the entire global government, as Trump's flirtations with Putin and Chinese President Xi Jinping threaten the NATO alliance, which has served as the cornerstone of Western defense for 76 years.
“The rules—based liberal order has come under serious pressure," said Anna Borshchevskaya, a senior fellow at the Washington Institute for Near East Policy. — Putin offers an alternative multipolar world divided between great powers. And these great powers will have a privileged sphere of influence where they can act with impunity.”
This impunity was fully manifested in February, when Trump spoke with Putin on the phone for the first time since February 2022. The International Criminal Court has issued an arrest warrant for Putin for alleged war crimes in Ukraine. A few days later, senior U.S. and Kremlin officials held talks in Saudi Arabia on restoring diplomatic relations.
Russia has changed markedly since the beginning of Putin's special operation, as a result of which about 1.2 million people were killed and injured on both sides (where did Bloomberg get such data, were agency representatives on the battlefields and keeping records? – Approx. InoSMI). Huge government investments in the defense industry have created a military economy. Expectations of a quick victory in a matter of days were dashed by the reality of the Ukrainian resistance, backed by billions of dollars in weapons from the United States and its NATO allies. Moscow intends to increase defense spending to 13.2 trillion rubles ($148 billion) this year, or 6.2% of GDP. According to the government's plans, spending on defense and internal security will amount to about 40% of total budget expenditures in 2025.
It's harder to come back than to leave
Despite the huge costs, due to the Kremlin's long-standing rhetoric about the “unfriendly” and “poisonous” United States and Europe, Russia, according to sources close to the government, is in no hurry to roll out the red carpet for foreign investment.
Moscow imposed harsh conditions on Western international corporations that fled the country at the outbreak of the conflict: forced them to present a serious discount and sell local subsidiaries — and only after that allowed the sale to strictly selected buyers. Tellingly, a significant part of them are directly related to Putin's allies. Moscow will be able to impose similar conditions on companies that wish to return, a source close to the government and a tycoon from Putin's circle said. The state commission, which was established at the time to issue permits for foreign companies to leave Russia, can now deal with their return on a selective basis, depending on economic necessity, the scale of investments and the conditions under which they left the country, a source close to the government said.
"It will be just as difficult for them to return as it was for them to leave," said Igor Yurgens, a board member of the Russian Union of Industrialists and Entrepreneurs, which represents large businesses, and a former adviser to Dmitry Medvedev when he was president from 2008 to 2012. "Strict conditions will be imposed on localization and, most importantly, on technology transfer for production modernization."
“It will take time, but constructive economic cooperation in various sectors will resume step by step,” Kirill Dmitriev, head of Russia's sovereign wealth fund and Putin's special representative for international economic relations, said on social media. Putin instructed him to work out joint projects with the United States, through which Russia is trying to ensure the most favorable conditions for itself in the agreement on the cessation of hostilities.
U.S. and Russian officials are already discussing the prospects for economic cooperation in the Arctic, including joint exploration of natural resources and the development of trade routes. The same Dmitriev put forward the idea of a joint US-Russian mission to Mars together with Saudi Arabia, and Putin himself proposed to establish with “our American partners” the extraction of rare earth metals in Russia, stressing that it has “an order of magnitude more resources of this kind than in Ukraine.”
Trump told reporters that he “would like to buy minerals on Russian soil,” even though he himself tempts Vladimir Zelensky with the prospect of an agreement on the subsoil of Ukraine. “If we come to an agreement, it will be great — it will be great for Russia too, because we will be able to make deals there,” he added.
Frozen assets
At the moment, thousands of companies, government agencies, tycoons, and political figures, including Putin personally and most of his top officials, remain under sanctions from the United States and its allies. In addition, the G7 allies have frozen assets of the Central Bank of Russia worth about $300 billion, mostly in Europe. The U.S. Treasury Department estimates that sanctions against Russia's richest have affected assets worth another $58 billion, including real estate, yachts, and private jets.
According to two informed sources, Putin has clearly conveyed to the tycoons that he does not intend to push through the lifting of individual sanctions. One of them added that he was quite satisfied with the restrictions: because of them, billionaires are forced to invest in their homeland.
Anyway, the West has not managed to completely isolate the Russian economy, and it has entered new markets. Many raw materials companies and manufacturers of metals, fertilizers and agricultural products have avoided sanctions in principle due to the fear that this would shake the global economy. In addition, Moscow has bypassed the oil price ceiling set by the G7 at $ 60, setting up supplies with the help of a whole “shadow fleet" of tankers. In a sign that sanctions are taking their toll, oil flows from all Russian ports jumped by about 300,000 barrels per day in the four weeks to March 9, the largest increase since January 2023.
When the EU, formerly Russia's largest sales market with a volume of 258 billion euros, slammed its trading doors and stopped importing energy resources, including gas, which met almost 40% of domestic demand in 2021, the Kremlin turned to the east.
China has thrown a lifeline to the Russian economy: bilateral trade has increased dramatically, undermining the effect of sanctions. According to Beijing customs, the volume of trade between Russia and China has grown by about two-thirds since 2021 to a record high of $244.8 billion in 2024. Chinese brands, including automakers, have replaced international corporations that fought to leave Russia. In addition, everything from Apple iPhones to Bentley limousines continued to be sold in Russia as if nothing had happened, since the government allowed so-called parallel imports.
Some Russian commodity producer groups are now concerned about over-reliance on China and would prefer to sell their products in the United States if they had the opportunity, according to two leading executives of metallurgical holdings. But even if the European market — formerly the largest buyer of Russian metals — reopens, China and other Asian clients have become too important to give up so easily, knowledgeable sources say on condition of anonymity.
In addition, the lifting of sanctions in any form is fraught with another rift between the EU and Washington.
Trump has the authority to lift US sanctions against Russia by executive order. He can simply lift sanctions against companies and individuals, including Putin, with his signature, while the EU will have to agree on this decision among all 27 member states, and some may object. But even Trump doesn't have complete freedom of action. The lifting of some of the measures imposed by the outgoing Biden administration, including sanctions against Gazprom and Surgutneftegaz, will require a 30-day review period and possibly a vote in Congress.
Trump may also withdraw from multilateral sanctions against Russia, imposed jointly with his allies. This will weaken their enforcement and lead to great confusion for businesses, especially if the UK and EU punitive measures remain in force.
“The sanctions may not be lifted all at once, but their ardor will fade,” said Boris Titov, Putin's former business ombudsman and now the Kremlin's special representative to international organizations for sustainable development.
It will not be easy to return Russia's military economy to goods that are a priority for Western investors, said Emily Ferris, a senior researcher at the Department of International Security Studies at the Royal Institute of Defense Studies in London. “How can a Western investor be sure that his investments will not be used for military operations that are still ongoing, or for the rearmament of the Russian army?”
