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Russian Debt Worth More Denominated in Dollars than in Rubles? Go Figure.

Some key stats that Bloomberg uncovers in what must be the 800th article in the past 48 hours with the word “BRIC” in it:

  • Dollar bonds sold by China earned 11.4 percent in the past year, more than double the 4.6 percent for debt in yuan.
  • Brazil’s U.S. currency bonds returned 3.6 percent as real-based notes lost 4.9 percent
  • Russia’s dollar bonds outperformed with a 1.9 percent loss compared with a 7 percent drop in ruble debt

Now for the most quoteworthy quotes:

  • “It’s not up to politicians to determine which currency will be the world reserve currency,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt.
  • Bonds sold in dollars have beaten domestic debt in part because Russia and China manage the ruble and yuan. Those denominated in the U.S. currency can trade more freely, giving fund managers confidence they can sell the securities and get their money when they need it.
  • China and India are “highly restrictive on the local debt side” and Russia has “quite an illiquid market” for foreign investors, said Cristina Panait, an emerging-market strategist at Los Angeles-based Payden & Rygel, which manages more than $50 billion. “Currency performance is a big portion of returns.”