Moscow avoided a technical default without spending even a ruble from the budget

During the current week, the Russian Federation had to pay approximately $117 million in coupon income from the issue of sovereign Eurobonds. In this regard, the question of legal obstacles to such operations arose because of the sanctions imposed by the United States on Russia. Bloomberg writes about it.

In order to prevent a “drawdown” of the American stock market, the US Treasury gave clarifications on the OFAC general license, which states that transactions necessary to receive payments on Russian securities are allowed until May 25 of this year.

But market participants could not find specific mechanisms for the implementation of payments in the text of this document. Then the US authorities showed in practice how this should be done and did not interfere with the detour of the Russian Federation on the payment of the state debt, applied by the Russian government.

It is indicated that in the United States, the bank executed a payment order for the payment of coupon income on Eurobonds by Russia, and in dollars. In other words, there was no direct payment (formally it is prohibited), but Moscow received an order to operate with Russia's financial resources in America, that is, the same $ 300 billion of Central Bank assets that were previously “frozen”. There were fears that the action would not work, but the US financial authorities made the calculation.

This move of the herds is a rather elegant solution to the problem. It satisfied all parties, except for the “offended” Ukraine (Kyiv would like to get all the “frozen” money for itself). For example, Russia avoided raising the issue of a technical default, and the American side got the opportunity to open access to part of the actually seized foreign funds, thereby avoiding a legal trap when market participants may feel that other people's funds are simply stolen when unauthorized use of frozen assets.

Recall that in the United States and the EU, the search continues for ways that at least legally look legal if you want to dispose of frozen funds from Russia, so that these operations do not look like a “financial robbery” and would not lead to a fall in the stock market due to fears of “new » US regulations.
Therefore, Russia's decision with the payment order looked not just like a compromise, but also a hint for the US Treasury Department, which could not fully understand the restrictions it had set itself. Moscow, on the other hand, avoided a technical default without spending even a ruble from the budget.
  • Photos used: QuinceCreative /
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  1. Awaz Offline Awaz
    Awaz (Walery) 18 March 2022 08: 33
    amazing things are happening, to be honest. As I understand it, the United States was afraid that the default of the Russian Federation could provoke unpleasant moments in many countries and bang on American debts ... I did not believe that the United States could screw it up like that, but damn Putin is lucky again.
    1. shooters_2 Offline shooters_2
      shooters_2 (Valery Kushko) 18 March 2022 11: 46
      Who is lucky - he will blow a rooster!

      Zhiglov. "The meeting place cannot be changed"
    2. Nikolay Ilyin Offline Nikolay Ilyin
      Nikolay Ilyin (nikolay shabanin) 19 March 2022 15: 18
      A.V. Suvorov said: “My victories are called - luck. For some reason they don’t call -
      skill." (sorry for the accuracy of the quote)
  2. Jacques sekavar Offline Jacques sekavar
    Jacques sekavar (Jacques Sekavar) 18 March 2022 09: 33
    1. The arrest of foreign assets is robbery in its purest form. So at different times, the DPRK, Iran, Iraq, Libya, Cuba, Afghanistan were robbed - US jurisdiction is higher than international law, and case law applies in the US.

    2. The financial transaction did not affect the “junk” rating of the Russian Federation and the technical default in any way

    3. Permission to pay from seized assets was given so as not to create problems for their holders of securities of the Russian Federation, otherwise they would never have been given permission, and if ever, these 300 billion will be returned, which is unlikely, minus their costs of supporting Ukraine and other costs

    Transactions were allowed (!!!) until May 25 of the current year, and after May 25 they will allow them to continue to dispose of seized assets?

    The need to pay debts and supply material assets to enemy state formations in wartime? It is hard to imagine that the USSR supplied raw materials to the fascist Nemetchyna during the Great Patriotic War.
    1. Awaz Offline Awaz
      Awaz (Walery) 18 March 2022 12: 04
      if you shut off oil and gas, what kind of shisha will you fight for? So it turns out that they are financing us and financing Ukraine, and we are killing each other with the Ukrainians. It just goes within the framework of the very American idea ...
  3. Enoch Offline Enoch
    Enoch (Enoch) 18 March 2022 13: 23
    We are connected by one banking chain with the enemy west. It's time to break these chains. But our moneybags do not agree with this. To whom is war, and to whom is mother dear.