Speculation that US sanctions could be expanded to include sovereign debt have caused a stir in the Russian bond market. It is still far from certain that this will happen. But were it to materialise, it would mainly affect newly-issued bonds – these could plausibly face a premium of 100bp over existing debt. A more general spike in investor risk aversion towards Russian debt would probably push up yields on all sovereign bonds – both existing and newly-issued – but this rise is likely to be more modest.
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