Belarus’s government bond prices tumbled on Monday as the EU prepared to tighten sanctions against President Alexander Lukashenko’s regime for its interception of a Ryanair flight to arrest a dissident.

The country’s dollar debt sank by about 5 per cent as investors reacted to reports that the new curbs could include a “Venezuela-style” ban on the trading of Belarusian securities that could leave bondholders unable to exit their positions.

“Sanctions that mean you can’t trade the bonds in the secondary market would go beyond anything we’ve seen imposed on Russia,” said Viktor Szabo, a portfolio manager at Aberdeen Standard Investments. “That would basically make them untouchable.”

The US has barred trading of Venezuelan debt since 2017, in effect shutting the market off to many foreign investors.

A Belarusian bond maturing in 2031, sold in June last year ahead of a contested election that triggered a brutal crackdown by Lukashenko on widespread protests, fell by nearly 5 cents to 87.7 cents on the dollar.

Investors said little actual trading was taking place, with brokers quoting indicative prices at even steeper declines of 5-6 per cent.

Belarus’s $3.6bn of dollar bonds, which traded higher than par value as recently as February, have slid in price after Belarusian authorities forced the aircraft to land last month, prompting international outrage.

EU countries last week provisionally agreed to wide-ranging sanctions targeting Belarus’s financial, oil, and potash sectors in a significant escalation of the pressure on Lukashenko’s authoritarian government.

The package is due to be finalised by finance ministers on Monday ahead of endorsement by EU leaders at a summit on Thursday.

“The assumption is they will sanction primary issuance following the Russia example,” said Timothy Ash of BlueBay Asset Management, referring to an April move by the US to bar American investors from buying new Russian government debt. “What’s unusual is the possibility of a ban on trading securities. Then it’s Venezuela-style. People won’t want to be locked into holding these bonds.”

Ash added that measures taken against Belarusian industries such as its large potash sector could be “crippling to the economy” and therefore undermine the government’s creditworthiness.