Russia May Own $140 Billion Worth of Chinese Bonds, ANZ Says

(Bloomberg) -- Russia's central bank and sovereign wealth fund probably own a combined $140 billion worth of Chinese bonds, assets that they may seek to access given global sanctions, estimates by Australia & New Zealand Banking Group show.

The Bank of Russia could hold $80 billion of yuan debt, while the National Wealth Fund is estimated to own $60 billion, analysts including Raymond Yeung wrote in a report Wednesday. Together, that represents almost a quarter of foreign ownership in China's domestic bond market, they said.

“Russia's China bond holdings and CNY could be major foreign assets and currency that Russia can access,” the analysts said. “We are watching if Russia will liquidate the assets if CNY cash is needed to meet other payment obligations.”

Russia could potentially use their yuan assets and China's own cross-border payment system to counter the impact of Western sanctions, they added.

China could provide a financial lifeline to Russia if Beijing decides to buck Western efforts to cut its strategic partner out of the global financial system. The country's central bank has a multi-billion dollar currency swap with its Russian counterpart, allowing the two countries to provide liquidity to businesses. China has also signed Russian banks onto its homegrown payments settlement system, seen as an alternative to the SWIFT messaging system, which some Russian lenders will be banned from using.

©2022 Bloomberg L.P.

With assistance from Bloomberg