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Russia’s central bank has announced a temporary ban on coupon payments to foreign holders of rouble-denominated bonds, also known as OFZs.

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The move is part of Russia’s efforts to sustain its markets after the country’s financial system was slammed with a range of sanctions by the US and its allies in response to its military attack on Ukraine.

At the start of February 2021, foreign investors held approximately $29bn (RUR3trn) in debt, according to a report by Bloomberg.

A ban on coupon payments will block these investors from collecting returns on their holdings, which are already barred from sale as part of restrictions. 

The Bank of Russia said in a statement: “Issuers have the right to make decisions on the payment of dividends and the making of other payments on securities and transfer them to the accounting system.

“However, the payments themselves will not be made by depositories and registrars to foreign clients. This also applies to OFZ.”

The central bank did not specify when the ban will be lifted.

Funds managed by Vanguard Group, State Street Global Advisors and JPMorgan Chase & Co are said to be among the recent holders of this bond, according to a report by WSJ. 

Meanwhile, a number of global asset managers have moved to exit their investments in Russian equities as the crisis deepens.

A recent report by Reuters said Denmark-based asset manager Nordea Asset Management is planning to sell its investments in the country and is planning a gradual exit.

British asset manager abrdn and hedge fund Man Group are also among the money managers who have been cutting down their Russia exposure in the past weeks.