The US Treasury Department said in a press release that it no longer allows any payments in dollars from Russian government accounts to US financial institutions to service Russia’s public debt from Monday, a fact that confirmed about.
This means that the payment of interest arrears on Russian government bonds denominated in US currency is no longer possible and Russia is now closer to a historic moratorium on payments.
Russia’s latest payment of bond coupons to US correspondent JPMorgan has not been approved, a Reuters source said.
It was the payment of interest arrears on two government bonds whose maturity date is 2022 and 2042.
The correspondent bank processes the interest arrears from Russia and transfers the amounts to another bank, which is responsible for distributing them to the foreign bondholders. Until now, payments were made normally, sources in the sector told Reuters.
A US Treasury Department spokeswoman confirmed that some payments were no longer allowed.
“Today (Monday) the deadline expired for Russia to make another payment of its debt,” she said, adding that “as of today, the US Treasury Department does not allow payments to be made by Russians.” government accounts in US financial institutions. “Russia has to choose between drawing on its remaining valuable dollar reserves, new revenue, or declaring bankruptcy.”
Moscow has a 30-day grace period for making the payment, according to a Reuters source.
Russia, which is set to repay 15 bonds to its international creditors with a nominal value of about $ 40 billion, has managed to avoid a moratorium on its foreign debt at this stage, despite unprecedented Western sanctions. But the task is becoming increasingly difficult.
If Russia does not make any of the forthcoming payments within the stipulated schedule, or if it makes payments in rubles while its contractual obligation is to pay in dollars, euros or other explicitly specified currencies, it will be deemed to have stopped paying.
Although Moscow no longer has access to international lending markets due to Western sanctions, the suspension of payments would mean that it will no longer be able to access the international capital markets before fully repaying its debts and settling any appeals to the competent courts. arise in the meantime.
Russia had to wait twelve years to start borrowing again from the international capital markets after its bankruptcy in 1998, when its economy was destabilized by the financial crisis that triggered Asia.
Since then, Moscow has been able to secure progressively very low interest rates and foreign exchange reserves of more than $ 600 billion, thanks to oil and gas sales. However, much of Russia’s foreign exchange reserves froze as part of Western sanctions over its invasion of Ukraine.
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