US plans to block Russian debt payments

UNITED STATES
UNITED STATES

The United States is considering blocking Russia’s ability to pay its US bondholders by allowing a key waiver to expire next week. This is according to an official of the American administration. Which could bring Moscow closer to the brink of default.

Russia has so far been successful in making its international obligation payments. And this, despite Western sanctions that complicate the payment process. Because, the country has 40 billion dollars of international obligations. And last month, he was making a late U-turn. By making late bond payments to avoid default, according to the US.

Indeed, Russia has not defaulted on its foreign debt since the day after its 1917 revolution. Similarly, it was rated “investment grade” until its operation in Ukraine on February 24.

Now Russia has the looming May 25 deadline. Date on which a US license to make payments is due to expire.

Bloomberg News reported earlier Tuesday that the Biden administration was close to allowing the waiver to expire as planned.

Russia will still have to pay nearly $2 billion before the end of the year

In this regard, note that the temporary general license 9A, issued by the Office of Foreign Assets Control of the Treasury Department on March 2, had made an exception. And this, for the purposes of “the receipt of interest, dividends or payments at maturity related to debt or equity”, recalls our source.

Thus, this license from Washington allowed Moscow to continue paying investors and avoid defaulting on its public debt. While US investors continued to collect coupon payments.

However, this license expires on May 25. After that Russia will still have nearly $2 billion in external sovereign bond payments to make before the end of the year.

Some market participants were speculating that the Biden administration could extend the waiver. And this, in order not to punish the holders of American bonds.

But the US Treasury Department did not immediately respond to a request for comment, says Bloomberg.

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