December 21, 2017 / 4:00 PM / 2 years ago

UPDATE 2-Putin orders bond issue in 2018 to help repatriation of funds

* Concern about U.S. sanctions list due end-January

* Moscow wants the business executives to repatriate their money

* Special bonds to return funds may worth up to $3 billion (Re-leads, adds details of new bonds, Finance Ministry comments)

By Denis Pinchuk and Darya Korsunskaya

MOSCOW, Dec 21 (Reuters) - Russia plans to adjust the terms of a sovereign Eurobond issue planned for next year so that businesses can repatriate funds in a way that would protect them from being damaged by potential new sanctions on Moscow.

U.S. President Donald Trump signed into law a new package of sanctions in August. One of the provisions asked the U.S. Treasury Secretary to submit a report on the impact of expanding sanctions to cover Russian sovereign debt, with an outcome expected as early as February.

Reuters reported earlier this month that wealthy Russians facing the prospect of targeted U.S. sanctions next year had floated the idea of a special treasury bond to help create favourable conditions for them to bring their cash home.

President Vladimir Putin on Thursday told a meeting of top businessmen and government officials that he ordered the new bonds to be placed in 2018 and that the central bank and the government had been working on the issue.

“I have given an order to define the necessary conditions and parameters to issue such papers for Russian investors and to ensure their circulation as soon as next year,” Putin said.

The central bank declined to comment.

Sources had previously told Reuters that it was crucial, unlike with bank accounts, that future holders of such bonds be able to remain anonymous.

Putin described the bonds as a “national external borrowing bond denominated in foreign currency”, phrasing typically used to describe Eurobonds.

Putin also said that the business people earlier this year had floated an idea of “mechanisms to repatriate the capital,” adding the proposal included the use of external sovereign debt denominated in foreign currency.

Russian Finance Minister Anton Siluanov told Reuters after the meeting that the Finance Ministry had considered issuing the Eurobonds up to a total of $3 billion, confirming the earlier plan for the next year.

“In line with the instruction of the president, the Finance Ministry will consider the parameters to issue the Eurobonds that the Russian investors willing to repatriate the capital will be able to buy”, the Ministry said in a separate statement.

“We will create such an opportunity for them within the existing sovereign external debt programme without increasing its volume”, the ministry said.

The new sanctions package drafted by U.S. lawmakers is expected to include a list of individuals with close links to Putin.

People on the list will not automatically be hit by personal sanctions, such as the freezing of foreign assets and bans on travel or access to foreign bank accounts. But many Russian business people have said they believe it will.

Reporting by Denis Pinchuk and Darya Korsunskaya; additional reporting by Elena Fabrichnaya; Writing by Andrey Ostroukh and Denis Pinchuk; Editing by Hugh Lawson and Jane Merriman

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