US unlikely to extend Russian debt payment license, says Treasury’s Yellen
The United States is unlikely to extend a soon-to-expire license that allows Russia to pay U.S. bondholders, Treasury Secretary Janet Yellen said on Wednesday, which could bring Moscow closer to defaulting on his debt.
Russia has so far managed to make its international bond payments even though Western sanctions prohibit dealings with Russia’s finance ministry, central bank or national wealth fund. The country has $40 billion in international obligations and last month made what appeared to be a late U-turn by making payments to avoid a default.
But Moscow now faces the May 25 deadline, when the US license to make payments to US bondholders is due to expire. Yellen, asked by reporters ahead of a meeting of G7 finance ministers in Bonn whether the United States would allow the license to expire, said: “There has been no final decision on this, but I think it’s unlikely to continue.”
Yellen said: “If Russia is unable to find a way to make these payments and technically defaults on its debt, I don’t think that really represents a significant change in Russia’s situation. They are already cut off from global capital markets.” Russia has not defaulted on its foreign debt since the day after its 1917 revolution and was rated investment grade until its invasion of Ukraine on February 24.
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