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US’ sanctions on Russia’s sovereign debt cover secondary market for bonds

The move responds to Russia’s decision to recognize the DPR and LPR and "to deploy troops to these regions," according to the press release

WASHINGTON, February 23. /TASS/. The US’ sanctions on Russia’s sovereign debt cover the secondary market for bonds issued after March 1, 2022, by the Bank of Russia, the National Wealth Fund (NWF), or the Finance Ministry, the US Department of the Treasury said in a press release on Tuesday.

Last year the US administration banned American financial institutions from participating in transactions on the primary market of ruble and non-ruble bonds issued after June 14, 2021 by the Bank of Russia, the NWF, or the Finance Ministry. The restrictions extended the existing bans on operations with Russia’s sovereign debt enforced in August 2019, when the US banks were banned from acquiring Russian non-ruble debt state bonds on the primary market and providing non-ruble loans to the Russian authorities.

"OFAC [US Office of Foreign Assets Control] issued Russia-related Directive <…> This extends existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation," the press release said.

"These restrictions significantly cut off a core way for Russia to raise money," the Department of the Treasury said.

The move responds to Russia’s decision to recognize the DPR and LPR (the Donetsk and Lugansk People's Republics) and "to deploy troops to these regions," according to the press release.

On February 21, Russian President Vladimir Putin recognized the sovereignty of the DPR and LPR (the Donetsk and Lugansk People's Republics). Subsequent agreements on friendship, cooperation, and mutual assistance were signed with their leaders. Putin instructed the Russian Foreign Ministry to establish diplomatic relations with the DPR and LPR, and the Russian Defense Ministry was instructed to ensure the maintenance of peace on their territories.