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Wall Street banks re-launch Russian bond trading: Report

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
In this file photo taken on April 17, 2019, The JPMorgan Chase & Co. World headquarters are pictured in New York City. (AFP photo)

Several major US banks are again offering to facilitate trading in Russian debt, as Washington rolled back its economic warfare against Moscow, an apparent attempt to help facilitate US holders to gradually dispose of them.

According to bank documents seen by Reuters, the Wall Street banks gave investors another chance to dispose of assets.

Most American and European banks had withdrawn from the market in June after the Treasury Department banned US investors from purchasing any Russian security as part of Washington’s economic warfare against Moscow over the conflict with Ukraine.

Following subsequent guidelines from the Treasury in July that allowed US holders to wind down their positions, the largest Wall Street firms have cautiously returned to the market for the Russian government and corporate bonds, Reuters reported, quoting emails, client notes and other communications from six banks as well as interviews with the sources.

The banks that are in the market now include JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Citigroup Inc. (C.N), Deutsche Bank AG (DBKGn.DE), Barclays Plc (BARC.L) and Jefferies Financial Group Inc. (JEF.N), the documents show.

The United States has tightened economic sanctions against Russia using the pretext of its conflict with Ukraine. The Treasury Department has banned American money managers from buying any Russian debt or stocks in secondary markets on top of its existing embargo on new-issue purchases.

On May 24, the Treasury Department announced it would no longer allow Russia to make debt payments owed to American bondholders, The Washington Post reported.

Data by one of the world’s largest financial securities transactions companies Euroclear shows that about $85 billion worth of securities held by foreign investors has been blocked.

Russia has denounced America’s decision, describing its actions as a default of the Western financial system, due to its failure to fulfill its financial obligations. 

Russia’s Finance Ministry has said Moscow will continue to fulfill its state debt obligations, despite the tightening of external restrictions.

A former US sanctions official has said the United States is pushing Russia toward default by blocking debt payments, as Washington ups the ante in its economic warfare against Moscow over the conflict with Ukraine.

Moscow has so far successfully managed to make its international bond payments despite the US-led sanctions that have hindered the process though.

Russia has not defaulted on its external debt for more than 100 years. It has several billions of international bonds and last month made overdue bond payments to avoid default.

Western countries have slapped unprecedented sanctions on Russia since President Vladimir Putin declared a military campaign against Ukraine on February 24.

The Biden administration has imposed harsh economic and banking sanctions on Russia in response to Russia's military actions in Ukraine.

US President Joe Biden said the sanctions would limit Russia's ability to do business in dollars, euros, pounds and yen.

Biden claimed that the only other alternative to the sanctions would be to start a “Third World War.”


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