Up until Wednesday, ...

… the U.S. Treasury Department had granted a key exemption to sanctions on Russia’s central bank that allowed it to process payments to bondholders in dollars through U.S. and international banks, on a case-by-case basis.

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 was announced in a bulletin Tuesday.

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.

Moscow has a deluge of debt service deadlines coming up this year, the first being on Friday, when 100 million euros in interest is due on two bonds, one of which requires dollar, euro, pound or Swiss franc payment while the other can be serviced in rubles.


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