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Translated by: Los Angeles Pangu Translation Team — TrueSky
On Wednesday, the United States will close the last avenue for Russia to repay billions of dollars of debt to international investors, making it likely that Russia will default on its debt for the first time since the Bolshevik Revolution.
In a notice, the U.S. Treasury said it does not intend to renew Russia’s licenses to make payments to debt holders through US banks. Since the first round of sanctions, the U.S. Treasury has authorized banks to process any payments from Russia on dollar-denominated bonds – a window that expires at midnight on May 25.
There are already signs that the Biden Administration is reluctant to extend the deadline. Last week, at a press conference at the G7 finance ministers’ meeting in Königswinter, Germany, U.S. Treasury Secretary Janet Yellen said the window existed “to allow a period of time for an orderly transition and to allow investors to sell securities”.
According to Yellen, “Expectations are time-bound.”
Without permission to use U.S. banks to repay its debts, Russia will not be able to repay its international bond investors. The Kremlin has been using JP Morgan Chase and Citigroup as conduits for its debt payments.
For its part, the Kremlin seems to have foreseen that the U.S. may not allow Russia to continue to repay its bonds. The Russian Finance Ministry on Friday prepaid two bonds due this month to advance the May 25 deadline.
The next payment Russia needs to make on its debt is due on 23 June. As with other Russian debt, these bonds have a 30-day grace period – which would result in Russia declaring default in late July, unless the following unlikely scenario occurs: the Russian-Ukrainian war ends before that time.
Edited by: MikeHua
Posted by: Peter Chen
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