US stops Russian bond payments, raising risk of default

US stops Russian bond payments, raising risk of default

A view shows a Russian rouble coin and a U.S. dollar banknote in this picture illustration taken October 26, 2018. REUTERS/Maxim Shemetov/File Photo



The United States stopped the Russian government on Monday from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks, in a move meant to ratchet up pressure on Moscow and eat into its holdings of dollars.

Under sanctions put in place after Russia invaded Ukraine on February 24, foreign currency reserves held by the Russian central bank at US financial institutions were frozen.

Follow our LIVE blog on Russia-Ukraine conflictBut the Treasury Department had been allowing the Russian government to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.

On Monday, as the largest of the payments came due, including a $552.4 million principal payment on a maturing bond, the U.S. government decided to cut off Moscow's access to the frozen funds, according to a U.S. Treasury spokesperson.

An $84 million coupon payment was also due on Monday on a 2042 sovereign dollar bond .

The move was meant to force Moscow to make the difficult decision of whether it would use dollars that it has access