Russia faces a full block on dollar bond payments

businessinsider.com: The Treasury Department is expected to block Russia's ability to pay US bondholders, sources told Bloomberg, raising the likelihood of a default.

Soon after the US imposed sanctions on Russia for its invasion of Ukraine, the Treasury's Office of Foreign Asset Control included an exemption for bond payments.

That allowed investors to continue receiving payments from Moscow via US banks, giving Russia's central bank room some breathing space and allowing it to avoid a default.

But that exemption expires on May 25, and officials aren't expected to renew it. Another source, however, told Bloomberg that said no final decision has been made.

At the beginning of May, Russia had narrowly avoided a historic default at the last moment when a clearinghouse processed its dollar debt payments.

Bloomberg had reported that investors started receiving their money after a 29-day wait — just one day before the 30-day grace period ended.

Since Russia invaded Ukraine, Western sanctions have forced Russia to draw down its valuable dollar reserves to pay off its debts, according to a Treasury official.

The idea was, per the official, to allow Moscow to drain those funds so they can no longer be used to fund the invasion.