Garfield Reynolds
Fri, February 25, 2022
(Bloomberg) -- Russia still has about $300 billion of foreign currency held offshore -- enough to disrupt money markets if it’s frozen by sanctions or moved suddenly to avoid them.
That’s according to Credit Suisse Group AG strategist Zoltan Pozsar, who parsed data from the Bank of Russia and financial markets to calculate that a much larger share is held in dollars than official numbers suggest. The Bank of Russia’s dollar exposure is about 50%, compared with the 20% it reports, Credit Suisse estimates.
That’s enough to substantially shift funding markets, according to Pozsar.
“$300 billion -– in the extreme -– can either be potentially trapped by sanctions, or moved somehow from West to East to avoid being trapped by sanctions,” Pozsar wrote in a report Thursday.
Russia’s multi-year push to remove the dollar’s hold over its economy has so far helped ease the impact of sanctions from the U.S. and its allies. Any unreported reserves would be far harder to track and target with sanctions, though it does raise the potential for the U.S. and others to target more accounts -- if they can identify where that money is. Pozsar wrote in his note that the offshore currency holdings he outlined could be vulnerable to sanctions, or to being moved out of their potential reach, potentially fueling further de-dollarization.
Russia’s central bank and private sector have almost $1 trillion of liquid wealth, with dollars accounting for more than most people realize, even after the country sold all its Treasuries holdings in 2018, Pozsar wrote. He estimates about $200 billion is held in foreign-exchange swaps, with another $100 billion in deposits at foreign banks.
Russia’s Yearslong Quest to Quit Dollar Is Blunting Sanctions
The U.S. has vowed to inflict a “severe cost on the Russian economy” that will hamper its ability to do business in foreign currencies, as Western nation warn that Kyiv could fall. Ukraine’s foreign minister said the capital was hit with “horrific” rocket strikes as Russian tanks, troops and aircraft pushed closer to the city.
Equities slumped along with bond yields this week as Russia prepared for and then carried out the assault on its neighbor. Risk sentiment revived late Thursday in the U.S after sanctions from the Biden administration spared Russian oil exports and avoided blocking access to the Swift global payment network. Asian equities advanced Friday, while yields on Treasuries rose.
“When flows change, spreads can gap,” Pozsar wrote. “If things escalate, it’s hard not to see a direct impact on FX swaps and U.S. dollar Libor fixings given Russia’s vast financial surpluses and where those surpluses are deployed.”
U.S. largest pension funds CalPERS and CalSTRS exposed to Russian assets
Fri, February 25, 2022
By Davide Barbuscia
NEW YORK, Feb 25 (Reuters) - California Public Employees' Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS), the two largest U.S. pensions funds, have exposure to Russian assets, which have come under pressure after Russia invaded Ukraine on Thursday, according to statements from the funds.
A spokesperson for CalPERS, which manages the largest U.S. public pension fund, said late on Thursday that the fund had around $900 million of exposure to Russia, but no Russian debt.
The spokesperson did not elaborate on the breakdown of the Russian assets and declined to comment on potential plans to trim those allocations.
CalSTRS, the second-largest U.S. pension fund, said it had investments in Russia and was monitoring potential risks to its portfolio. Its exposure to Russian assets was worth over $800 million in June last year, according to the latest available data and Reuters calculations.
CalPERS manages nearly $500 billion in assets, while CalSTRS has assets totalling around $320 billion.
"CalSTRS will follow any relevant financial sanctions levied by the United States Government," a spokesperson said in an emailed statement to Reuters.
International sanctions aimed at further limiting Russia's ability to access global financial markets after the country's attack on Ukraine have pressured already battered Russian assets.
Yields on Russian benchmark 10-year OFZ rouble bonds , which move inversely to prices, rose to 14.09% on Thursday, their highest since early 2015, though the bonds pared back some losses on Friday. The dollar-denominated RTS stock index rose sharply on Friday but still stood near a two-year low.
According to the latest available data on its website and Reuters calculations, CalSTRS had exposure to nine Russian local sovereign bonds, so-called OFZs, with a market value of nearly $32 million as of June. Its holdings of Russian roubles had a market value of about $1.5 million at that time.
On the equity side, its allocations were worth around $800 million in June and included securities issued by energy companies like Gazprom and Lukoil, as well as by sanctions-hit Russian banks Sberbank and VTB.
"CalSTRS has investments in Russia, and as with all investments, we monitor potential risks to the portfolio to ensure our investments are protected. The Russian invasion of Ukraine is a potential risk and we are closely following developments", the spokesperson said.
Several global money managers have trimmed their exposure to Russian assets this week and in the weeks prior to the invasion.
Two Danish pension funds this week said they were pulling back from Russia, and Canada's second-biggest pension fund, Caisse de depot, said on Thursday it had sold its Russian positions.
Large U.S. money managers like BlackRock, Vanguard, and PIMCO, manage funds with billions of dollars of exposure to Russian bonds, according to data from industry tracker Morningstar Direct.
Among U.S. domiciled funds, the PIMCO Income Fund Institutional Class had the largest allocation to Russian government bonds, estimated at $1.16 billion by taking the portfolio weight times the fund's total net assets as of the end of last month, Morningstar data showed.
PIMCO declined to comment on plans to trim its allocations to Russian assets. Vanguard did not immediately respond to a request for comment.
A BlackRock spokesperson said on Thursday the world's largest asset manager was monitoring regulatory guidelines on Russia. (Reporting by Davide Barbuscia; Editing by Ira Iosebashvili, Bernard Orr)
Fri, February 25, 2022
By Davide Barbuscia
NEW YORK, Feb 25 (Reuters) - California Public Employees' Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS), the two largest U.S. pensions funds, have exposure to Russian assets, which have come under pressure after Russia invaded Ukraine on Thursday, according to statements from the funds.
A spokesperson for CalPERS, which manages the largest U.S. public pension fund, said late on Thursday that the fund had around $900 million of exposure to Russia, but no Russian debt.
The spokesperson did not elaborate on the breakdown of the Russian assets and declined to comment on potential plans to trim those allocations.
CalSTRS, the second-largest U.S. pension fund, said it had investments in Russia and was monitoring potential risks to its portfolio. Its exposure to Russian assets was worth over $800 million in June last year, according to the latest available data and Reuters calculations.
CalPERS manages nearly $500 billion in assets, while CalSTRS has assets totalling around $320 billion.
"CalSTRS will follow any relevant financial sanctions levied by the United States Government," a spokesperson said in an emailed statement to Reuters.
International sanctions aimed at further limiting Russia's ability to access global financial markets after the country's attack on Ukraine have pressured already battered Russian assets.
Yields on Russian benchmark 10-year OFZ rouble bonds , which move inversely to prices, rose to 14.09% on Thursday, their highest since early 2015, though the bonds pared back some losses on Friday. The dollar-denominated RTS stock index rose sharply on Friday but still stood near a two-year low.
According to the latest available data on its website and Reuters calculations, CalSTRS had exposure to nine Russian local sovereign bonds, so-called OFZs, with a market value of nearly $32 million as of June. Its holdings of Russian roubles had a market value of about $1.5 million at that time.
On the equity side, its allocations were worth around $800 million in June and included securities issued by energy companies like Gazprom and Lukoil, as well as by sanctions-hit Russian banks Sberbank and VTB.
"CalSTRS has investments in Russia, and as with all investments, we monitor potential risks to the portfolio to ensure our investments are protected. The Russian invasion of Ukraine is a potential risk and we are closely following developments", the spokesperson said.
Several global money managers have trimmed their exposure to Russian assets this week and in the weeks prior to the invasion.
Two Danish pension funds this week said they were pulling back from Russia, and Canada's second-biggest pension fund, Caisse de depot, said on Thursday it had sold its Russian positions.
Large U.S. money managers like BlackRock, Vanguard, and PIMCO, manage funds with billions of dollars of exposure to Russian bonds, according to data from industry tracker Morningstar Direct.
Among U.S. domiciled funds, the PIMCO Income Fund Institutional Class had the largest allocation to Russian government bonds, estimated at $1.16 billion by taking the portfolio weight times the fund's total net assets as of the end of last month, Morningstar data showed.
PIMCO declined to comment on plans to trim its allocations to Russian assets. Vanguard did not immediately respond to a request for comment.
A BlackRock spokesperson said on Thursday the world's largest asset manager was monitoring regulatory guidelines on Russia. (Reporting by Davide Barbuscia; Editing by Ira Iosebashvili, Bernard Orr)
Caisse de Depot Sells Russia Holdings; CPPIB Reports No Exposure
Layan Odeh
Thu, February 24, 2022,
(Bloomberg) -- Caisse de Depot et Placement du Quebec, Canada’s second-largest pension fund, sold securities affected by Western sanctions being imposed on Russia in response to the invasion of Ukraine, Chief Executive Officer Charles Emond said.
“As from today and for the future, we decided to sell all the securities under sanctions, that’s our position as an institution,” Emond told reporters Thursday at a briefing in Quebec.
Emond didn’t provide an estimate of the value of the holdings. The securities included are in the oil and gas and financial services sectors, he said.
Even so, Emond said it’s “impossible” not to have exposure to Russian assets given that they are part of many global indexes. CDPQ manages about C$420 billion ($327.6 billion).
In a statement, a CDPQ representative said that the organization “will continue to carefully respect all Canadian sanctions and our position hasn’t changed: We have no interest in direct investments in Russia.”
Separately, Canada’s largest pension fund said that it hadn’t made any acquisitions in Russia and has no direct exposure to the country.
“We made a conscious decision years ago not to have Russia as one of our markets,” Canada Pension Plan Investment Board spokesman Frank Switzer said in a statement.
Layan Odeh
Thu, February 24, 2022,
(Bloomberg) -- Caisse de Depot et Placement du Quebec, Canada’s second-largest pension fund, sold securities affected by Western sanctions being imposed on Russia in response to the invasion of Ukraine, Chief Executive Officer Charles Emond said.
“As from today and for the future, we decided to sell all the securities under sanctions, that’s our position as an institution,” Emond told reporters Thursday at a briefing in Quebec.
Emond didn’t provide an estimate of the value of the holdings. The securities included are in the oil and gas and financial services sectors, he said.
Even so, Emond said it’s “impossible” not to have exposure to Russian assets given that they are part of many global indexes. CDPQ manages about C$420 billion ($327.6 billion).
In a statement, a CDPQ representative said that the organization “will continue to carefully respect all Canadian sanctions and our position hasn’t changed: We have no interest in direct investments in Russia.”
Separately, Canada’s largest pension fund said that it hadn’t made any acquisitions in Russia and has no direct exposure to the country.
“We made a conscious decision years ago not to have Russia as one of our markets,” Canada Pension Plan Investment Board spokesman Frank Switzer said in a statement.
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