Cancellation of a license
Citing sources, the authors of the article said that the US Treasury revoked the general license, which excluded payments to service part of the sovereign debt of the Russian Federation from anti-Russian sanctions. This document, which allows Moscow to pay in bonds, expires on May 25.
“The end of the license could be the final straw in Russia’s debt saga after nearly three months of war in Ukraine. So far, it has been able to make all its payments to creditors and has navigated a stigma of sanctions blocking some roads.
As is known by the publication, some US Treasury officials privately claim that “letting Russia pay off its debt will further deplete its treasury and redirect resources that would otherwise be spent on weapons and military operations in Ukraine.”
“However, the administration has decided not to renew the license in order to continue the financial pressure on Moscow. Another person familiar with the matter said that the Ministry of Finance has not yet made a final decision,” said the authors of the material.
In doing so, they added, “any impact of payments to creditors on Russia’s finances pales in comparison to the money the country makes each week by exporting oil, gas and other commodities.”
Bloomberg reported that Moscow’s next debt payments should be made on May 27 for foreign bonds with maturities in 2026 and 2036. Initial issuance is in dollars, but allows payment in euros, Swiss francs or pounds sterling as well as interest in dollars to accounts in Switzerland, the UK or the EU. And on the second issuance of euro-denominated bonds, which will expire in 2036, there is an additional clause that allows payment in rubles.
In total, by the end of June, Russia owed more than $490 million to its bond creditors.
“The US decision effectively deprives American investors of the ability to get money from Moscow, these points may not be enough to allow Russia to bypass tougher restrictions,” write the paper’s authors.
Reuters also cited an unnamed US official. knowledgeablethat the issue of extending the general license is still “under consideration”.
“(Russian President Vladimir – socialbites.ca) We are considering all options to increase the pressure on Putin,” the agency’s source said.
Earlier in March, it became known that the US Treasury issued a license that allows investors to receive debt payments from Russia’s sovereign Eurobonds.
Later, as an exception, transactions were allowed to “receive interest, dividends or payments in the repayment of debt or shares” of the Central Bank of Russia, the National Welfare Fund (NWF), and the Russian Ministry of Finance and the Central Bank. , NWF or Ministry of Finance. At the same time, debt obligations must be issued before March 1, 2022 (Americans are prohibited from investing in new securities).
In additional explanations to the license, the United States Department of the Treasury said that after May 25, US residents will need to obtain individual permits to receive interest or principal payments on Russian sovereign Eurobonds.
After the start of the Russian Federation’s military special operation in Ukraine and subsequent sanctions by the USA, EU and their allies, about half of the international reserves of the Bank of Russia were blocked. The US also banned the use of frozen dollar reserves to pay off foreign debt, effective April 4th. Therefore, the Ministry of Finance of Russia for the first time made the payment of foreign debt in rubles.
In early April, White House spokeswoman Jen Psaki said the US sanctions were designed to give Russia a choice between spending its foreign currency reserves or going into default.
“Russia doesn’t have unlimited resources, especially with the crippling sanctions we now impose. “They will have to choose between depleting their remaining dollar reserves, spending the new revenues, or going into default.”
He added that the sanctions have brought the Russian financial system “to the brink of collapse”.
In response, Russia’s Ministry of Finance accused the United States of trying to artificially create barriers for Russia to make payments in foreign currency. The head of the Central Bank, Elvira Nabiullina, said that the country has all the necessary financial resources and there is no threat of default.