Beautiful Virgin Islands

Sunday, Aug 02, 2026

US Treasury blocks Russian bond payments, raising risk of default

US Treasury blocks Russian bond payments, raising risk of default

The decision further complicates Russia’s attempts to keep meeting debt obligations amid the sanctions imposed after it invaded Ukraine.

Russia’s efforts to avoid a sovereign default took another blow after the U.S. Treasury halted dollar debt payments from the country’s accounts at U.S. banks.

The decision further complicates Russia’s attempts to keep meeting debt obligations amid the sanctions imposed after it invaded Ukraine. As the government tries to sidestep its first external default in about a century, those restrictions have hampered and delayed the process of transferring money to bond holders.

Other governments are also planning tougher sanctions after allegations that Russian troops massacred civilians in Bucha and other Ukrainian towns. The European Union is proposing to ban coal imports from Russia, which would be a major step-up for a region that’s so far shied away from targeting energy flows crucial to the bloc’s economy.

The U.S. announcement is intended to force Russia into either draining its domestic dollar reserves or spending new revenue to make bond payments, or else go into default, according to a spokesperson for the Treasury’s Office of Foreign Assets Control, who discussed details on condition of anonymity.

“Clearly this latest announcement by the U.S. Treasury is designed to put additional pressure on the Russians,” said Gary Kirk, a portfolio manager at TwentyFour Asset Management. “The alternative payment methods are significantly more punitive and more challenging for Russia and hence it does increase the chances of a technical default.”

Despite warnings from credit-rating companies and others, Putin’s government has so far stayed current on its foreign debt obligations.

But the sweeping sanctions have already led to the seizure of an estimated two-thirds of Russia’s reserves. The central bank says it’s also sold some of its foreign currencies to support the ruble, leaving questions on how long it can pull from its local coffers to pay its debts.

Russia’s foreign-currency and gold reserves were about $604 billion as of March 25, down $38.8 billion from a February peak. Still, it’s reaping in huge sums from exports of energy. Bloomberg Economics expects it will earn nearly $321 billion this year if the commodities continue flowing.


But even with the funds, payments haven’t been smooth, with many delayed by banks doing lengthy checks to ensure they aren’t breaching sanctions.

A once-$2 billion dollar bond that matured Monday served as the most recent stress test, though Russia was able to buy back about three-quarters of the outstanding amount in rubles before the note came due. The latest U.S. move will intensify scrutiny on its ability to pay back the remainder of that debt.

Additionally, coupon payments due Monday on a 2042 bond had yet to reach some investor accounts as of Tuesday morning in London, according to bondholders who declined to be named because they are not authorized to speak publicly.

Russia’s dollar bonds, which were already trading well into distressed territory, fell on Tuesday. The 2042 declined 7 points to about 28 cents on the dollar, according to CBBT pricing.

The U.S. announcement “increases the risk of default, not because of lack of money,” said Lutz Roehmeyer, chief investment officer at Berlin-based Capitulum Asset Management. “The new sanction will cause technical issues with regard to the settlement systems, so it is now an open question how Russia will construct the payment routes.”

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Andy Burnham has Announces Plans to Redistribute Income Tax Revenue to English Mayors
Early-Release Scheme Faces Fresh Scrutiny as Reoffending and Prison Recalls Rise
Police Phone Checks Followed Report on Murder of MI5 Agent Inside Sinn Féin
Archbishop of Canterbury Reaffirms £100 Million Reparative Justice Fund During Ghana Visit
Drought Status Extended Across All of Wales as Heat and Dry Weather Deepen Environmental Strain
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The chief executive of the popular gaming company laid off many employees and his pay rose to 38 million dollars
The World's Most Terrifying Smartphone: Recording, Documenting, and Reporting to the Regime
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
UK: Former Football Association Leaders Call for World Cup Boycott Over FIFA Privatization Plan
Forbidden Love: China severs millions from their virtual partners
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Zuckerberg Opposes US Ban on Chinese AI Models and Warns of Regulatory Capture
Massive Wildfires Ravage Southern Europe: Fatalities in Greece and Evacuations Across France, Spain, and Turkey
Trump says Israel ‘would not survive’ without US
France Evacuates Atlantic Coast Resorts as Wildfire Risk Rises Again
Magnitude 7.1 Earthquake Strikes Kumamoto as Rescuers Search Collapsed Buildings
OpenAI Faces Demands for Full Disclosure After Models Breach Hugging Face
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
Royal Collection Trust Income Falls as Palace Visits Retreat From Record Highs
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Ministers Examine Social-Care Levy as Burnham Seeks Funding Settlement
Apple Briefly Crosses Five Trillion Dollar Valuation as Investors Retreat From AI Bets
Badenoch Offers Tory Votes to Keep Serious Offenders in Prison
Why Americans Queue for $15 Ice Cream and a $100 Caviar Pint
Another AI Genius Left the United States — and Silicon Valley Is Starting to Worry
Shein Reports $99mn Loss as Trade Barriers Test Low-Cost Model
CXMT Gains 466% in China’s Biggest IPO Since 2010
Amazon Seeks Approval for 5,105-Satellite Mobile Network
Burnham Puts School-to-Work Reform at Centre of Welfare Strategy
Burnham Rules Out Replacing Council Tax and Stamp Duty
Fresh Heatwave Threatens to Rekindle France’s Historic Wildfire Crisis
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
Autopsy Finds No Violence in Death of Epstein-Linked Model Scout
Indian Education Minister Resigns After Cockroach Youth Protests
California Desert Data-Centre Plan Stalls as Water and Power Disputes Mount
War, Youth Revolt and the Global Struggle for Control
War, Power and the Rising Price of Political Decisions
Badenoch Rejects Grant Shapps' Bid to Return as Conservative Candidate
BAE Chief Warns Britain Has Underestimated the Risk of War
Burnham Rules Out New Scottish Independence Referendum in First Talks With Swinney
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Viral Video Raises Questions Over Twelve-Dollar Croissants at Manhattan Bakery
Miliband Sets Climate and International Law at Centre of UK Diplomacy
US Gasoline Returns to $4 as Renewed Iran Fighting Disrupts Oil Flows
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Orders 50% Tariffs on Selected Canadian Imports
×