U.S. blocks Russian debt payments and unveils new sanctions in bid to raise pressure on Moscow
The United States stopped the Russian government on Monday from paying holders of its sovereign debt more than $600 million from reserves held at American banks, in a move meant to ratchet up pressure on Moscow and eat into its holdings of US dollars.
Under sanctions put in place after Russia invaded Ukraine on Feb. 24, foreign currency reserves held by the Russian central bank at US financial institutions were frozen.
But the Treasury Department had been allowing the Russian government to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.
On Monday, as the largest of the payments came due, including a $552.4 million principal payment on a maturing bond, the US government decided to cut off Moscow’s access to the frozen funds, according to a US Treasury spokesperson.
An $84 million coupon payment was also due on Monday on a 2042 sovereign dollar bond.
The move was meant to force Moscow to make the difficult decision of whether it would use dollars that it has access to for payments on its debt or for other purposes, including supporting its war effort, the spokesperson said.
Russia faces a historic default if it chooses to not do so. [Continue reading…]
The Wall Street Journal reports:
The U.S. and the EU are set to unveil new sanctions on Russia this week, after allegations from Ukraine of potential war crimes against civilians by Russian forces galvanized a push for tougher measures against the Kremlin.
On Tuesday, the European Commission, the EU’s executive arm, proposed broad new sanctions on Russia, European officials said, including a ban on imports of Russian coal, slashing the access of Russian road and shipping goods carriers into the bloc, targeting oligarchs and their families and blocking some machinery exports.
The measures will need backing from the bloc’s 27 member states. Meanwhile, the U.S. plans Wednesday to announce a new package of sanctions that would include a ban on all new investment in Russia, according to people familiar with the matter.
The sanctions will also include additional measures hitting Russian financial institutions and state-owned enterprises, and Russian government officials and their families, the people said.
The proposed ban on Russian coal, confirmed by European Commission President Ursula von der Leyen, would be the first time the EU has agreed to block imports of one of Russia’s main energy supplies. EU capitals remain divided on whether to impose a ban on Russian oil and gas imports, although the momentum behind introducing a phased-in embargo of Russian oil supplies is gathering. [Continue reading…]