US bars investors from buying Russian debt, stocks on secondary market

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. 

Citizens of the United States were not barred to trade hundreds of billions of dollars’ worth of assets already in circulation on secondary markets despite sweeping American sanctions in recent months, according to Reuters.  

The ban extends to all Russian debt and all Russian firms' shares are affected, not just those ones named in sanctions, according to a statement published on the Treasury’s website on Monday.

"Consistent with our goal to deny Russia the financial resources it needs to continue its brutal war against Ukraine, Treasury has made clear that US persons are prohibited from making new investments in the success of Russia, including through purchases on the secondary market," a Treasury spokesperson said on Tuesday.

US investors are still allowed to sell or continue to hold Russian assets that they already own, according to rules.

The Treasury announcement was posted in the Frequently Asked Questions section of the department's website, rather than announced with the most recent round of sanctions. This has surprised some analysts.

"The surprising new thing here is that trading of all existing debt has been now been prohibited, at least for the US citizens," said Seaport Global emerging market credit analyst Himanshu Porwal.

"We have been trading some of the names like Lukoil very actively, but now the US accounts will be unwilling to transact."

US pushes Russia towards default by blocking debt payments: Official

A former US sanctions official says 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.

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.

Yellen has downplayed the repercussions of a Russian default, pointing out that the country is already largely unable to raise funds from international creditors because of the existing sanctions and investor flight over the war.

“Russia is not able to right now to borrow in global financial markets; it has no access to capital markets,” Yellen told reporters last month in Germany where she participated in a conference of economic officials from the Group of Seven Western industrialized nations.

“If Russia is unable to find a legal way to make these payments, and they technically default on their debt, I don’t think that really represents a significant change in Russia’s situation. They are already cut off from global capital markets, and that would continue,” she said.

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

US monitoring any moves to circumvent Russian sanctions through use of gold: Yellen

Meanwhile, US Treasury Secretary Janet Yellen said on Tuesday said the Treasury is closely monitoring any Russian efforts to circumvent sanctions through the use of gold.  

She also said that gold-related transactions involving Russia may be sanctioned.

"This is an important matter," Yellen told a Senate Finance Committee hearing on Treasury's budget. "We're closely monitoring any efforts we can see to circumvent our Russia-related sanctions through the use of gold."

US President Joe Biden can issue an executive order to approve sanctions on such transactions over Russia’s war with Ukraine.

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

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

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

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