From the BBC:
“US closes loophole for
Russian debt payments”
The US is cutting off another
financial route for Russia to pay its international debts, a move that could
push the country closer to default. The US Treasury Department said it would
end a waiver that had allowed US bondholders to accept payments, tightening
sanctions imposed over the war in Ukraine. Russia, which is rich from its oil
and gas supplies, has the funds to pay. It has already signalled plans to
contest any declaration of default.
The country has almost $2 billion
worth of payments that will be due up to the end of the year on its
international bonds. While the new rules only apply to people in the US, they
will make it difficult for Russia to make payments elsewhere given the role of
US banks in the global financial system. The US had already barred Russia from
using US banks to transfer payments. In comments last week, US Treasury Secretary
Janet Yellen warned the waiver for investors was likely to expire. She said the
exemption had been intended to allow an "orderly transition".
Analysts have said they do not
expect major ramifications from the move outside of Russia, with IMF chief Kristalina
Georgieva saying in March that exposure to the holdings was "not
systemically relevant". Russia's debt was already downgraded to"junk
status" by major ratings agencies in March, a move that disqualifies it
from purchases by major investors, making it difficult for Russia to raise
money on international markets. Professor Philip Nichols of the Wharton School
at the University of Pennsylvania said it's not clear what Western holders of
Russian bonds have done in the weeks since the invasion, whether rushing to
offload them or holding on in hopes the situation will eventually normalise. A
default would mark the first time Russia has failed to pay its government debt
since 1998 - the economic crisis at the end of then President Yeltsin's term in
office. It would likely trigger a court case, opening up Russia to recovery
proceedings from creditors. Inside Russia, any impact would be felt only over
the long term as part of the country's wider economic isolation, Prof Nichols
said. "Russia just has a lot of oil and gas and that translates into a lot
of money, but in the long-run, this is part of a web of instruments that are
designed to make it far, far more difficult for Russia to wage war on its
neighbours," he said. "It's going to be really interesting to see
what happens," Prof Nichols said.
^ Hopefully, other Countries also
close their loop-holes as well as stop paying Russia in Rubles instead of the
US Dollars and Euros their Contracts say they have to pay in. Every time they
pay Russia the Russians are able to kill more innocent Men, Women and Children.
^
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