The US Treasury Department late on Tuesday it would let lapse a license which expired at 12.01am ET on Wednesday and allowed Russia to make interest and maturity payments on its sovereign debt to US persons.
"If the bondholders don't get their money when the money is due, factoring in any grace periods that apply, Russia will be in default on a sovereign debt," said Jay Auslander, a partner at law firm Wilk Auslander."With the waiver gone, there seems to be no way for bondholders to get paid." Russia has broadly three tiers of international bonds: legacy ones issued with offshore settlement provisions, then those issued after Moscow was sanctioned over its 2014 annexation of Crimea, which settle in Moscow at the NSD and have alternative hard-currency payment provisions. Lastly, there are recently issued bonds which settle at the NSD and also have an additional provision for payment in roubles.The bonds awaiting payments on Friday were settleable at the NSD.
The ministry said the US decision not to extend a waiver allowing Russia to service its bonds in foreign currencies would hit foreign investors first.Sanctions imposed on Russia for launching the largest land war in Europe since World War Two include freezing roughly half of its US$640 billion foreign currency reserves.
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