Reuters: Lukashenka’s bonds threatened by repression

The hashtag #BelarusBloodBonds on Twitter reminds banks and investment funds of their obligations and calls to get rid of debt bonds issued by Alyaksandr Lukashenka’s regime, writes

The capture of Raman Pratasevich and his girlfriend, Sofia Sapega, has raised new concerns among investment funds about the ethics of investing in Belarusian government debt, employees of several companies told Reuters.

One investment manager told Reuters on condition of anonymity that his fund is already selling Belarusian government debt bonds under pressure from clients who noticed the social media activity.

“You can’t talk about ESG and invest in a really bad actor – and more and more companies are afraid of the reputational risk,” the manager told Reuters.

Belarus now has about $5.5 billion in bond debt. Among those who bought these securities are such funds and banks as BlackRock, PIMCO, NN IP, UBS, Aberdeen Standard, and JPMorgan.

In total, the external state debt of Belarus is $18.5 billion.

Some investors have already decided to get rid of Lukashenka’s bonds. Thus, Jens Munch Holst, the managing director of the Danish fund AkademikerPension, whose assets total $22 billion, has already added these securities to the list of those that will not be bought.

On the other hand, some of the largest investment funds continue to invest in regimes with questionable human rights records. The 2018 murder of Saudi journalist Jamal Khashoggi, for example, had little effect on the attractiveness of Saudi bonds. Likewise, western funds are holding billions of dollars worth of Chinese bonds, even though the U.S. and the European Union have criticized Beijing’s violations in this area.

“The extreme description of this kind of assets is that these are blood bonds where the regime oppresses or tortures its citizens,” said Aberdeen Standard Investments’ portfolio manager Viktor Szabo, whose company holds Belarus bonds and has been targeted by the social media campaign.

However, the new sanctions may have more of an impact on Lukashenka’s ability to borrow on the open market. For example, the German foreign minister said Thursday that the European Union might ban Lukashenka from issuing bonds in European financial markets, according to Reuters.