The U.S. has announced that it will not extend an exemption permitting Moscow to pay foreign debt to American investors in U.S. dollars, potentially forcing Russia into default.
Up until Wednesday, the U.S. Treasury Department had granted a key exemption to sanctions on Russia's central bank thatenabled Russia to meet its previous debt payment deadlines
However, the Treasury Department's Office of Foreign Assets Control has allowed the exemption to expire as of 12:01 a.m. ET on Wednesday, it wasRussia has built up substantial foreign currency reserves in recent years and has the funds to pay, so will likely contest any declaration of default on the grounds that it attempted payment but was blocked by the tightened sanctions regime.
In the event of a missed payment, Russia will face a 30-day grace period before likely being declared in default.'Unknown territory' Adam Solowsky, partner in the Financial Industry Group at global law firm Reed Smith, told CNBC on Friday that Moscow will likely argue that it is not in default since payment was made impossible, despite it having the funds available.
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