4.4.22
The US Treasury has blocked Russia's attempt to pay more than $600 million due on foreign sovereign bonds, as it tries to ramp up the economic pressure on Moscow. Up until Monday, the Treasury had been allowing American banks to process the payments so that money would reach US bondholders, despite the tough sanctions imposed over Russia's invasion of Ukraine. But the department changed policy Monday, with a spokesperson telling Insider: "The US Treasury will not permit any dollar debt payments to be made from Russian government accounts at US financial institutions. "Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default." The Treasury told JPMorgan, Russia's foreign correspondent bank, that it did not have authorization to process the more than $600 million of payments due on two dollar bonds late Monday, according to a person familiar with the matter. JPMorgan declined to comment. Timothy Ash, a senior emerging markets strategist at BlueBay Asset Management, told Insider he thinks there's now an 80% chance that Russia defaults. Even if Russia finds a bank to pay foreign investors, bondholders may not be able or willing to accept the money, he said. He added that a default would be a nightmare for Russia that could lock it out of global capital markets for years to come.