Russia faces fund exodus as ICE removes sanctioned debt from indices, MSCI reviews investability amid Ukraine fallout

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ICE has removed all debt by sanctioned entities, including lenders Vnesheconombank and VTB, from Monday and will not include any new ones in its March rebalancing

MSCI, which froze all Russian securities on Thursday, is seeking feedback on their treatment in indices after reviewing its accessibility and investability

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A woman leaves an exchange office with screen showing the ratea for Russian rubles in Moscow, on February 24. Photo: AP

Cheryl Heng

Published: 3:02pm, 1 Mar 2022Updated: 1:14pm, 9 Mar 2022

Russian bonds and equities face a potentially wider sell-off in the coming weeks as sanctions isolate banks and exporters and hurt the nation’s currency, prompting index compilers to remove affected securities from their global indices.

Intercontinental Exchange (ICE) said it would exclude sanctioned entity debt covered by the US Office of Foreign Assets Control, UK or European Union from its fixed income indices from February 28. These would include any new debt issued by Russia’s central bank, sovereign wealth fund or the finance ministry.

Any new issuance of sanctioned debt will be blocked, and any existing debt of blocked entities will be removed at the March 31 rebalancing. Examples include debt issued by state-owned lenders Vnesheconombank and VTB Bank, it added.

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“We will continue to monitor this list and may take additional action as further information is released,” it said in a statement on Monday.

ICE, which owns the ICE BofA Index family and operates exchanges including the New York Stock Exchange, has separately confirmed that its equity indices contained no sanctioned entities from Russia or Belarus.

MSCI, which froze all Russian securities last week, is seeking feedback from market participants on whether to remove Russian stocks from its indices after reviewing its accessibility and investability, it said on Tuesday. More updates are due by the end of the week, it said.