Russian tycoons, fearing new sanctions, float new bond idea: Sources

Moscow (Reuters): Wealthy Russians facing the prospect of targeted U.S. sanctions next year have floated the idea of a special treasury bond to facilitate favourable terms for bringing their cash home, three sources familiar with the scheme said.

The bond, denominated in foreign exchange, would be offered at a higher yield than bank rates and be more liquid than Eurobonds, the sources said. Crucially, unlike with bank accounts, holders would be able to remain anonymous.

“There is information that a number of people want to bring their foreign cash assets back here,” said an executive from a major Russian state company, who like others spoke on condition of anonymity because of the sensitivity of the topic.

“The idea they came up with is that you open some sort of account, with that you buy special bonds which the finance ministry will issue.”

There was no indication that the Russian government was seriously considering such a move, and the finance ministry declined to comment. Two sources close to the ministry said they did not look favourably on the idea.

A senior executive in a Russian state bank said it would accelerate a move that has already started.

The banker said wealthy people in President Vladimir Putin’s inner circle were putting modest amounts of foreign currency into Russian bank deposits.

“But the interest rates on foreign currency deposits are low, whereas investing in finance ministry forex instruments can secure them good returns,” he said. “They can make money on that.”

A source in the Russian financial markets said he had also heard from wealth managers about new cashflows from abroad. “They are moving their money to Russia,” he said.