US cut offs loophole for Russian debt payments

The United States is closing another financial route for Russia to pay its international debts amid sanctions against Moscow over the Ukraine war. The move pushes Russia closer to default.

Earlier US bondholders could accept payments from Russia_ but the US Treasury Department is going to end the waiver.

Russia_ one of the world's largest oil and gas supplier_ has the funds to pay. The country has already signaled plans to combat any declaration of default.

The country has almost $2bn worth of payments that will be due this year on its international bonds.

While the new rules imposed by US Treasury Department only apply to people in the country_ they will make it difficult for Moscow to make payments elsewhere given the role of US banks in the global financial system.

The Biden administration had already barred Russia from using US banks to transfer payments.

US Treasury Secretary Janet Yellen warned last week that the waiver for investors was likely to expire. The exemption had been intended to allow an "orderly transition"_ she said.

Analysts have said they do not expect major effect from the move outside of Russia.

In March_ Russia's debt was downgraded to "junk status" by major ratings agencies in March_ disqualifying it from purchases by major investors_ making it difficult for Moscow to raise money.
 
If default happens_ that would mark the first time Russia has failed to pay its government debt since 1998.