The United States has stopped coupon payment of Russia’s latests sovereign bond, according to Reuters citing source familiar with the matter and as spokeswoman for the U.S. Treasury said.
A latest sovereign bond coupon payment have not received authorization by the U.S. Treasury to be processed by corresponding bank JPMorgan, says Reuters. The payments were due on bonds in 2022 and 2042.
The move has put Russia on the verge of historic default.
The process involves JPMorgan being the corresponding bank to process the payments from Russia and send them to the payment agent to distribute to overseas bondholders.
A U.S. Treasury spokeswoman also confirmed that certain payments were no longer being allowed.
“Today is the deadline for Russia to make another debt payment,” the U.S. Treasury spokeswoman said.
“Beginning today, the U.S. Treasury will not permit any dollar debt payments to be made from Russian government accounts at U.S. financial institutions. Russia must choose between draining remaining valuable dollar reserves or new revenue coming in, or default.”
According to Reuters, the country has a 30-day grace period to make the payment.
Russia has total of 15 international bonds outstanding with a face value of around $40 billion. The country has so far management to avoid default on its offshore debts despite unprecedented sanctions by the West.
If Russia fails to make any of its upcoming bond payments within their pre-defined timeframes, or pays in roubles where dollars, euros or another currency is specified, it will constitute a default.