As the Biden Administration continues to emphasize the importance of using economic and financial tools to penalize the Kremlin for its invasion of Ukraine, the United States and allied countries have implemented a wide range of sanctions and other penalties targeting Russian companies and leaders. Within this mix, capital markets sanctions have been leveraged in an unprecedented fashion, now targeting select state-owned companies and banks with tougher restrictions than have ever been leveled against them before.
These sanctions now prohibit any U.S. person from participating in new issuances of debt and equity securities by thirteen designated companies and banks. They do not, however, mandate the divestment of existing positions nor mention investor exposure via passive investment products such as index funds (although, within the past 48 hours, index providers have begun to voluntarily exclude a significant number of Russian companies).
A new report by RWR Advisory Group highlights this aspect of U.S. sanctions policy, the recent history of the way sanctioned Russian companies have been present in the U.S. capital markets, the openings that exist for new sanctions pressure to be applied, and the precedent set by policy already implemented against China through measures such as the Non-SDN Chinese Military Industrial Complex Companies (NS-CMIC) List.