Belarus dollar bonds drop over forced airliner grounding

imageStock Markets26 minutes ago (May 24, 2021 04:26AM ET)

LONDON (Reuters) – Belarus sovereign dollar-denominated bonds tumbled on Monday after authorities forced an airliner to land on Sunday, arresting a journalist on board and drawing condemnation from Europe and the United States.

The 2030 bond dropped more than 3 cents to trade at 90.869 cents in the dollar – the lowest level since the disputed August 2020 election roiled its debt, data from Tradeweb showed. The 2026 issue matched those falls.

Spreads of Belarus government bonds over safe-haven U.S. Treasuries have blown out by 37 basis points to 603 bps from Friday, as measured on the JPMorgan (NYSE:JPM) EMBI global diversified index.

“The Belarussian action risks massive geopolitical/economic tensions unless it is immediately condemned by all countries, and the blogger freed,” Michael Every, senior macro strategist at Rabobank, said in a note to clients.

“Meanwhile, the EU’s small Baltic states suddenly appear much more exposed,” he added.

EU leaders are set to discuss additional sanctions against Belarus at a summit starting in Brussels later in the day after the events described by some EU leaders as a hijacking.

Belarus has repeatedly come under scrutiny in recent years.

The disputed August 2020 election and a crackdown on protests prompted the European Union, along with the United States, Britain and Canada, to impose asset freezes and travel bans on almost 90 officials, including President Alexander Lukashenko.

The EU first imposed sanctions on Belarus in 2004. It tightened them in 2011 over abuses of human rights and democratic standards, including vote-rigging.

The country’s dollar-denominated bonds, which yield more than 7%, are held by many major asset managers from Amundi Asset Management and HSBC Asset Management to BlackRock (NYSE:BLK) Investment Management, according to filings.

Belarus dollar bonds drop over forced airliner grounding

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