U.S. considering move to block Russian debt payments

WASHINGTON Reuters The United States is considering a move to block Russias ability to pay U.S. bondholders after a deadline expires next week, a U.S. administration official said on Tuesday.

Bloomberg News said the Biden administration is poised to make the move and that it could bring Moscow closer to the brink of default.

“It‘s under consideration but I don’t have a decision to preview at this time,” the official told Reuters. “We are looking at all options to increase pressure on Putin.”

The Treasury Departments Office of Foreign Assets Control is expected to allow a general license that expires May 25 to lapse, the Bloomberg report said, adding the administration has decided against extending the waiver as a way to maintain financial pressure on Moscow.

Western sanctions ban transactions with Russias finance ministry, central bank or national wealth fund, although the temporary general license 9A issued by OFAC on March 2 makes an exception for the purposes of “the receipt of interest, dividend, or maturity payments in connection with debt or equity.”

That license expires on May 25, however, after which Russia will still have almost 2 billion worth of external sovereign bond payments to make before the end of the year.

The U.S. Treasury Department did not immediately respond to Reuters request for comment.