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US cracks down on Russian debt payments, final sovereign payments halted

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Latest Sovereign Bond Coupon Payments Have Not Received US Treasury Authorization to Be Processed by Correspondent Bank JP Morgan (JPM)the source said.

Payments were due on bonds due in 2022 and 2042.

The correspondent bank processes coupon payments from Russia and sends them to the paying agent for distribution to foreign bondholders.

Previously, coupon payments on sovereign bonds had been processed, sources told Reuters.

A US Treasury spokeswoman also confirmed that some payments were no longer allowed.

“Today is the deadline for Russia to make another payment on its debt,” the spokeswoman said. “As of today, the US Treasury will not authorize any dollar debt payments from Russian government accounts with US financial institutions. Russia must choose between depleting precious remaining dollar reserves or new income, or default.”

The country has a 30-day grace period to make the payment, the source said.

Russia, which has a total of 15 international bonds outstanding with a face value of around $40 billion, has so far managed to avoid defaulting on its international debt despite unprecedented Western sanctions. But the task becomes more difficult.

If Russia fails to make any of its next bond payments within the predefined time frame, or pays in rubles when the dollar, euro or other currency is specified, this will constitute a default.

Although Russia is unable to access international debt markets due to Western sanctions, a default would prohibit it from accessing these markets until creditors are fully repaid and all disputes arising from the default are settled.

cnn

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