Russia debt default prospect resurfaces as U.S. blocks bond payment

Russia debt default prospect resurfaces as U.S. blocks bond payment

The prospect of a Russian debt default has once again been brought to the fore with the U.S. Treasury blocking -denominated debt payments from Moscow via U.S. banks. The move on Monday evening prevents the Kremlin from paying holders of its with the more than $600 million of dollar reserves held with U.S. financial institutions, and is aimed at forcing Russia to either use up more of its own stockpile of dollar reserves or accept a first debt default in decades. Sanctions imposed following Russia's invasion of Ukraine on Feb. 24 had already frozen all foreign currency reserves held by the Central Bank of Russia with U.S. banks, but the Treasury Department had permitted Moscow to use those funds to meet coupon payment obligations on its dollar-denominated debt on a case-by-case basis. "Russia is facing a recession, skyrocketing inflation, shortages in essential goods, and a currency that no longer works in much of the world," a U.S. Treasury spokesperson told CNBC on Tuesday. The spokesperson added that one of the "most potent" actions of the 700+ sanctions the U.S. has imposed had been those levied on the CBR with "unprecedented multilateral coordination, speed, and impact." A $552.4 million principal payment