Russia’s Exit from Bond Indexes to Trigger Portfolio Rebalancing
- Selling Russian bonds may impact other emerging market notes
- India, the Middle East and Southeast Asia likely to benefit
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Russia’s dismissal from global bond indexes has deepened the country’s financial isolation, and will have broad geographical ramifications for credit investors, with funds reallocated to other issuers.
Fixed income in India, the Middle East and Southeast Asia is likely to benefit, according to Lombard Odier. Credit default swaps on Russian sovereign debt, meanwhile, are now signaling an 80% chance of default.