(Bloomberg) -- Investors are offering as little as 30 cents on the dollar for bonds issued by sanctioned Russian aluminum group United Company Rusal, according to people familiar with the matter.
Bond desks of banks including Goldman Sachs Group Inc., UBS Group AG and JPMorgan Chase & Co. have circulated bids between 30 cents and 50 cents this week, the people said, asking not to be identified because the information is private. The offers are theoretical as clearing houses Euroclear and Clearstream aren’t currently processing settlement of the notes, they said.
U.S. holders of bonds issued by the firm, which is controlled by billionaire Oleg Deripaska, have until May 7 to sell $1.6 billion of dollar-denominated securities under the latest round of sanctions. Non-U.S. nationals are also at risk of penalties if they facilitate transactions related to Rusal and other companies owned by targeted individuals.
An official at UBS declined to comment on the prices. Officials at Goldman Sachs and JPMorgan didn’t immediately comment.
International investors, some of whom bought debt at par in Rusal’s $500 million bond issuance in January, are seeking alternatives to electronic trading ahead of the May deadline to avoid the risk of their holdings being frozen, the people said.
Options to trade without going through clearing houses may include transferring the beneficiary of the notes through a claim contract or the reinstatement of physical trading through custodian banks, they said.
“A solution could be to move settlement to a Russian bank, or even change the currency of the bonds through a consent solicitation, but investors want to know whether these alternatives are in the spirit of the sanctions,” said Dean Tyler, global head of fixed income at Exotix Capital. “We have had conversations with clients on how to trade and receive bond coupon payments, but we are still at an early stage and everybody wants to get it 100 percent right.”
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