Tuesday, May 17, 2022

US Set To Block Russian Debt Payments Next Week To Force Moscow Into Default

Illustration shows Russian Rouble coins are seen in front of displayed U.S. Dollar banknote. © Reuters/DADO RUVIC 

Bloomberg: US Set to Block Russian Debt Payments, Raising Odds of Default 

(Bloomberg) -- The Biden administration is poised to fully block Russia’s ability to pay US bondholders after a deadline expires next week, a move that could bring Moscow closer to the brink of default. 

The Treasury Department’s Office of Foreign Assets Control is expected to let a temporary exemption lapse once it expires on May 25, according to people familiar with the matter. 

he waiver, issued shortly after the US levied sanctions on Russia over its invasion of Ukraine in February, has given Moscow room to pay coupons, helping it avert default on its government debt. 

The end of the carve-out could be the final straw in Russia’s debt saga after almost three months of war in Ukraine. It’s managed to make all its payments to creditors so far, weaving through the tangle of sanctions that closed off some avenues. 

That includes an 11th-hour escape earlier this month, when blocked payments were eventually allowed through after Moscow tapped its domestic dollar reserves. But it’s unclear how it can sidestep the end of the US loophole.  

Read more ....  

Update #1: U.S. considering move to block Russian debt payments -Treasury (Reuters)  

Update #2: Russia faces a full block on dollar bond payments as a key US sanctions waiver is expected to expire — putting Moscow closer to a historic default: report (Business Insider)  

WNU Editor: If the US succeeds in blocking Russia from making its debt payments, expect more market chaos next week.

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