U.S. considering move to block Russian debt payments – Treasury

The United States Department of the Treasury is seen in Washington, DC, US, August 30, 2020. REUTERS/Andrew Kelly

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WASHINGTON, May 17 (Reuters) – The United States is considering blocking Russia’s ability to pay its US bondholders by allowing a key waiver to expire next week, a US administration official said on Tuesday.

Bloomberg News reported earlier onTuesday that the Biden administration is poised to allow the waiver to expire as scheduled on May 25, which could bring Moscow closer to the brink of default.

“It’s under consideration but I don’t have a decision to preview at this time,” the official told Reuters. “We are looking at all options to increase pressure on (Russian President Vladimir) Putin.”

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Bloomberg said the administration has decided against extending the waiver as a way to maintain financial pressure on Moscow.

Western sanctions introduced following Russia’s invasion of Ukraine ban transactions with Russia’s finance ministry, central bank or national wealth fund.

However, a temporary general license 9A issued by the Treasury Department’s Office of Foreign Assets Control on March 2 makes an exception for the purposes of “the receipt of interest, dividend, or maturity payments in connection with debt or equity.”

That license has allowed Moscow to keep paying investors and avert default on its government debt, and allowed US investors to continue to collect coupon payments.

It expires on May 25, after which Russia will still have almost $2 billion worth of external sovereign bond payments to make before the end of the year. read more

Some market participants had speculated that the Biden administration may extend the waiver, so as not to punish US bondholders.

The US Treasury Department did not immediately respond to Reuters request for comment.

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Reporting By Steve Holland and Akriti Sharma; Editing by Franklin Paul, Chris Reese and Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.

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