LONDON, May 24 (IFR) - The US State Department has further warned international firms of the risks of doing business with Russia ahead of the sovereign's first international bond deal since sanctions were imposed in 2014.
Although the Russian Federation is not subject to sanctions, several state-owned entities are, including VTB, which is the sole lead manager on the bond transaction.
In a statement to IFR, a State Department official said: "We continue to be clear in our engagements with US companies that we believe there are risks - both economic and reputational - associated with a return to business as usual with Russia."
The spokesman added that beyond undertaking due diligence to ensure they are not violating US sanctions, "it is essential that private companies - in the US, EU, and around the world - understand that Russia will remain a high-risk market so long as its actions to destabilize Ukraine continue."
Russia is poised to complete the 10-year bond transaction later on Tuesday. On Monday, it announced that it was marketing the deal at a yield of 4.65-4.90%.
Demand for the bond was US$5.5bn as of Monday afternoon.
The bond's prospectus states that proceeds will not be used to finance sanctioned entities, but some international investors are wary about buying the deal as there is no sure way to determine where the money goes. (Reporting by Paul Kilby, writing by Sudip Roy; edited by Alex Chambers and Robert Smith)