On May 24, 2022, the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") issued a Notice indicating that OFAC will not renew the provisions of General License ("GL") 9C which expired at 12:01 AM on May 25, 2022. GL 9C generally authorized all transactions ordinarily incident and necessary to dealings in debt or equity of certain Russian entities. However, note that the authorizations related to certain of these entities are not set to expire until June 30, 2022 and July 1, 2022.
GL 9C also generally authorizes all transactions that were ordinarily incident and necessary to the receipt of interest, dividend, or maturity payments in connection with debt or equity of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation issued before March 1, 2022. This authorization also expired on May 25, 2022.
In effect, the expiration of these aspects of GL 9C means that the U.S. can block certain Russian bond principal and interest payments to U.S. investors. If Russia is unable to find another way to make payments, Russia could default on billions of dollars of principal and interest payments held by U.S. investors.
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