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Silver Lining of Becoming Junk

If investment-grade Russian bonds are downgraded, they'll likely attract new buyers, become significant part of global high-yield benchmark.

By Natasha Doff, Bloomberg | Updated on February 26, 2015

Russia’s US$63 billion of investment-grade corporate bonds may find a new buyer in Rogge Global Partners if they follow the sovereign in getting downgraded to junk.

Rogge may consider adding OAO Lukoil notes if the credit rating of Russia’s second-largest oil producer is also lowered to Ba1 at Moody’s Investors Service, said David Newman, the head of global high-yield debt at Rogge, set up in 1984 and managing $55 billion in at least 12 funds. According to Newman’s calculations, Russia’s share in the Bank of America Merrill Lynch Global High Yield Index may rise to as much as 5.5 percent from 1.9 percent once its corporate bonds are downgraded.

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