Jim Rogers Loads Up on Ruble Bonds on Bet Sanctions Don't Matter

(Bloomberg) -- After getting burned in the worst month for Russian bonds in more than a year, Jim Rogers says the toughest wave of U.S. sanctions yet doesn’t spook him.

The 75-year-old chairman of Rogers Holdings Inc. has been using the sell-off that followed the April 6 penalties to buy more short-term ruble debt. He recommends focusing on Russia’s fundamentals and the highest prices since 2014 for crude oil, the nation’s key export earner.

“Oil is up, things are getting better, sanctions aren’t going to be forever and they aren’t going to be that damaging,” said Rogers, who increased his holdings of the OFZs in May. “Lots of countries in the world don’t pay attention to the sanctions.”

Jim Rogers Loads Up on Ruble Bonds on Bet Sanctions Don't Matter

Back in late March, the veteran investor told Bloomberg he was buying local debt to bet on a stable currency, high real rates, and the country’s recent return to investment-grade status. Two weeks later, and the sanctions announcement had sent the ruble into a tailspin. The currency is down 6.4 percent since then, while Brent has rallied almost 20 percent. Three-year local bond yields have jumped almost 40 basis points.

“The ruble is under pressure because of the sanctions,” Rogers said in a phone interview from Singapore. “That’s what people think about this week, it’s a short-term thing, but it won’t have too much of an effect in the long term.”

He’s not alone in that view.

Money managers at Goldman Sachs Asset Management and Aberdeen Standard Investments said in recent interviews they’re buying the ruble because it’s bound to benefit at some point from the rally in oil. And Pictet Asset Management’s Patrick Zweifel and Nikolay Markov predicted Russia will shrug off the penalties because the nation’s finances are “in excellent shape.”

The government’s current-account surplus “provides a sufficient cushion to absorb the impact of sanctions,” they wrote in an e-mailed note on Friday.

©2018 Bloomberg L.P.

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