- The US Treasury blocked Russia's attempt to pay more than $600 million due on sovereign dollar bonds on Monday.
- The US told JPMorgan, Russia's foreign correspondent bank, that it was not authorised to process the funds.
- It ramps up the pressure on Moscow, which is facing tough economic sanctions over its war in Ukraine.
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The US has stopped 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.
The US Treasury blocked JPMorgan, Russia's foreign correspondent bank, from processing the payments due on 2022 and 2042 bonds late on Monday, a person familiar with the matter told Insider. JPMorgan declined to comment.
An official from the Treasury told Reuters the department had blocked Russia from paying bond holders using reserves held at US banks.
The official said the move was meant to make life harder for the Russian government and force it to use its own holdings of US dollar, according to Reuters. The Treasury did not immediately respond to a request for comment.
The block came as the US weighed up putting further sanctions on Moscow, after widespread reports of Russian atrocities in Ukraine, including the execution of civilians. US President Joe Biden said his Russian counterpart Vladimir Putin should face trial for war crimes.
Russia had, up until Monday, surprised foreign investors by keeping up its bond payments. The Treasury had consistently given JPMorgan and other lenders authorisation to process payments.
But the agency's dramatic change of policy raises new questions about Russia's ability and willingness to pay its foreign currency-denominated debts.
Russia was due to pay around $550 million on a bond that matured on Monday. It had originally been facing a $2 billion maturity payment, but bought back about $1.45 billion worth of the issue in roubles, largely from domestic bondholders.
The government was also due to make an $84 million coupon payment on a 2042 dollar bond.
Russia now has to decide whether to dig into its own reserves of US dollars. As part of the tough Western sanctions imposed on the country over its invasion of Ukraine, the central bank has been frozen out of almost half of its roughly $640 billion worth of foreign currency reserves.
Moscow now has a 30-day grace period in which to make the payments on both bonds, or it could default. The last time Russia fully failed to pay its foreign debts was in 1918, following the communist revolution.