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I just saw in Bloomberg

https://www.bloomberg.com/news/articles/2022-03-03/wall-street-is-already-pouncing-on-russia-s-cheap-corporate-debt

that Goldman Sachs Group Inc. and JPMorgan Chase & Co. have been purchasing beaten-down company bonds tied to Russia in recent days.

Isn't such an act breaking the current sanctions on Russia? I suppose by purchasing their bonds, Goldman and JPMorgan are helping Russia's economy.

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    Don't close it. If they are indeed vulturing around that should become apparent in their corporate filing documents at some point. Though that may not happen for a while. There's big leeway between breaking the rules and profiteering legally. Which the question could be reworded to clarify - agree with Fizz that it is highly unlikely those corporations are breaking the law. Mar 4 at 17:11
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    War profiteering has a long tradition. With oil majors like BP wanting to dump their Russian holdings, general risk and PR aversion from most other investors and Russia not wanting any dollars to go out to buy those assets there is ample scope for arbitrage and profits by those willing to hold their nose. Mar 4 at 17:21
  • Funny/related story: dock workers in the UK have decided to plug a loophole in the sanctions themselves: bbc.com/news/uk-england-kent-60619112 (Have to say that the name of the ship was like a no-brainer even for dock workers...)
    – Fizz
    Mar 4 at 17:21
  • It could be that they buy from other sellers outside Russia, so basically from one another. Russia doesn't profit from it, but the banks basically make a bet.
    – Trilarion
    Mar 4 at 17:21
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    @Trilarion: it's not exactly so because the price of those "bets" also influences the cost of the issuer raising new debt.
    – Fizz
    Mar 4 at 17:24

1 Answer 1

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Probably unanswerable without knowing the details, i.e. which specific companies/bonds, details which haven't even been shared in that article. I'm sure Goldman and JP have good lawyers that have perused the sanctions, which (insofar) don't include all Russian assets. If you had more details, you could ask on law SE.

Relevant quote from the article though

At one major U.S. hedge fund, a decision was made to avoid Russian bonds entirely for now. The specter of holding debt that could become untradeable in another round of sanctions is too risky, and the war is just a week in.

Obviously some at Goldman and JP are betting not all Russian assets will be added, perhaps before some rebounce or they can find buyers, e.g. Chinese etc.

Generally speaking, larger companies like Goldman or JP have better compliance departments, which enables them to better weight risks like these.

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  • By the way, the situation with Russian oil is pretty similar at the moment. Not officially banned, but shunned by a lot of Western companies, so it's at a deep discount for those who do want it. edition.cnn.com/2022/03/03/investing/…
    – Fizz
    Mar 5 at 9:02

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