US law firm, Steptoe & Johnson, has issued an article speculating that western investors may be shut out of the sovereign debt market as a result of new or modified sanctions. US (and EU) sanctions aimed at Russian debt financing have been in place since 2014. The new concerns follow the warning last year against US or EU banks participating in a Russian sovereign Eurobond offering, on the grounds that the proceeds may be diverted to sanctioned state-owned enterprises. Currently, U.S. law does not prohibit involvement in the issuance or trading of Russian sovereign debt. However, the recently enacted Countering America’s Adversaries Through Sanctions Act (CAATSA) in the US might alter the situation, particularly as section 242 requires the US Treasury to report on possible expansion of sanctions “to include sovereign debt and the full range of derivative products.”
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