The U.S. adds pressure on Russia by blocking bond payments, raising the risk of default by skleb1234
Russian government assets held at U.S. institutions under sanctions put in place after the invasion of Ukraine, it had still been allowing use of those funds to make payments on sovereign debt.it will no longer allow Russia to access those dollars as it tries to meet sovereign debt obligations to bondholders.
Russia had over $600 million in combined bond payments due on Monday, which is when the department decided to fully block Moscow’s access to frozen funds, according to the Treasury. The move will “further deplete the resources Putin is using to continue his war” and forces his government to choose whether to use its own dollar holdings to make debt payments or use the money elsewhere, such as for the war effort in Ukraine, Treasury officials said.
It also greatly increases the risk of a potential default, as Moscow will now be forced to use alternative sources of funding to pay bond investors: While Russia has so far been making its payments, that will likely become increasingly complicated by heavy economic sanctions from the West. If Russia does default, that will likely drive its last few remaining foreign investors out of the country, further devalue the ruble and Russian companies could follow the government in defaulting on their obligations.Russia has a total of 15 international bonds outstanding with a combined face value of roughly $40 billion owed in dollars and euros. If Russia is unable to make those payments, or unable to do so in the correct currency, it will default.“The U.S.
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