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The US prohibits Russia from servicing its foreign debt

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On May 27, the Russian Ministry of Finance was to pay 26.5 million euros and 71.25 million dollars in bonds, but the agency did so in advance.

The Department of The US Treasury has announced it will not extend the sanctions waiver that allowed Russia to make debt payments on sovereign bonds to Western investors, which expires on Wednesday.

“The Office of Foreign Assets Control will not renew the provisions of the GL-9C issued in accordance with the Regulation of Sanctions for Prejudicial Foreign Activities of Russia expiring on May 25, 2022 at 12:01 (local time) “, says the statement.

Previously, US Treasury Secretary Janet Yellen confirmed that her country is unlikely to extend the license, which would lead Russia to the possibility of entering a technical ‘default’. “If Russia is unable to find a way to make these payments and technically defaults on its debt, I don’t think that really represents a significant change in Russia’s situation,” the senior official stressed.

On May 27, the Russian Ministry of Finance was to pay 26.5 million euros and 71.25 million dollars in bonuses. However, a week before the payment date, the entity declared that it had fulfilled its obligations to pay the coupons for these issues in advance.

Already in April, the Russian Ministry of Finance announced that for the first time it paid in rubles to foreign holders of Eurobonds, after a foreign financial institution rejected an attempt to liquidate the payment of 649.2 million dollars by order of the USA

Russian presidential spokesman Dmitri Peskov assured that there is no reason for a real default by Russia, adding that this situation is artificially created by the West. “ Russia has all the resources it needs to pay its debts,” he stressed.

  • The Office of Foreign Assets Control issued a waiver on March 2 that it allowed Moscow to pay its foreign currency loans with frozen reserves, although this required the approval of US banks.
  • Due to this exemption, Russia managed to make two sovereign Eurobond coupon payments. On March 17, Two Eurobond issues were settled for a total value of 117.2 million dollars maturing in 2023 and 2043, respectively. Another eurobond coupon worth 65.63 million dollars due in 2029 was paid on March 22.
  • For his part, the Russian Minister of Finance, Anton Siluánov, pointed out that “the freezing of the foreign currency accounts of the Russian Government and its Central Bank can be described as the desire of some foreign countries to provoke a artificial non-payment that has no real economic basis”.
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