Status: 05.04.2022 11:12 am
The US Treasury withheld the payment of interest and principal on two Russian government bonds through US banks. The move apparently targets foreign exchange reserves held directly by Moscow.
The US Treasury Department no longer wants to allow interest and principal payments from Russian government accounts at US banks. According to sources in the financial community, the Ministry of Finance did not give correspondent bank JPMorgan permission to process the latest payments on Russian government bonds.
Affected were the repayment of an $552.3 million bond maturing and an interest payment on an $84 million bond maturing in 2042.
frozen balance
According to the US Treasury Department, the aim is for Moscow to decide now whether to use foreign exchange reserves under its direct control for payments. These funds would no longer be available for other purposes, including the financing of the war.
After the Russian invasion of Ukraine, Russian deposits in American banks had already been frozen. However, the Treasury Department has so far approved the use of these funds to pay interest on dollar-denominated bonds on a case-by-case basis.
Yesterday, several Western countries announced new sanctions in response to alleged Russian war crimes in Ukraine.
Is Russia still willing to pay?
As such, it is in the interest of the US government that Western creditors receive payments from Russia. So far, despite sanctions, Russia has managed to avoid defaulting on its international debt. But it is unclear whether the Kremlin will continue to pay under the new conditions.
Russia now has a 30-day grace period to make payments. If he misses this deadline or pays in rubles, although dollars, euros or another currency is indicated, this is considered a default.
Currently, international lenders hold a total of 15 bonds of the Russian Federation with a face value of around US$40 billion. The country was barred from issuing more bonds in Western financial markets as part of the sanctions until further notice.