New debt by Russian firms subject to US sanctions not eligible for key bond indexes-JPMorgan

LONDON, July 18 Fri Jul 18, 2014 4:05am EDT

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LONDON, July 18 (Reuters) - Any new debt issued by the Russian companies subject to latest U.S. sanctions will not be eligible for inclusion in JPMorgan's bond indexes, the most widely used emerging debt indexes, the bank said.

"As a result of the latest U.S. Treasury sanctions, new debt issued by Gazprombank, Novatek, Rosneft and VEB (Vneskekonombank) will not be eligible for inclusion into the JPMorgan suite of indices due to investors' inability to replicate the benchmark," JPM said in a note late on Thursday.

Oil firm TNK-BP, not named officially in the sanctions but 90 percent owned by state oil major Rosneft, will also be subject to the restriction, JPM said.

However, existing debt of these companies will not be affected, the bank said, adding that sanctions imposed to date had not affected its indexes.

The United States on Wednesday slapped its harshest sanctions to date on Russian companies in response to what it sees as the Kremlin's role in the Ukraine crisis, prohibiting dealing in new debt issued by these four firms.

JPMorgan said state-run Vneshekonombank had a 0.55 percent weight in its EMBIG Diversified index of sovereign dollar debt while Gazprombank, Novatek and Rosneft, along with its subsidiary TNK-BP, have a combined 0.76 percent share in the CEMBI Broad Diversified index of corporate EM bonds.

Benchmarked assets under management to the EMBIG and CEMBI series total $313 billion and $66.3 billion respectively. (Reporting by Sujata Rao; Editing by Susan Fenton)

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