many of the same ships have recently started trading Venezuelan oil that is under U.S. sanctions.

The spread of AIS manipulation by E.U.-registered vessels shows how advances in technology allow some shipowners to earn windfall profits from commodities under sanction while benefiting from European financial services and legal safeguards.

Cyprus’s deputy shipping minister, Vassilios Demetriades, said illegal manipulation of on-ship equipment is punishable by fines or criminal penalties under the island’s laws. But he has downplayed the problem, saying AIS’s “value and trustworthiness as a location device is rather limited.”

According to Cyprus’s corporate documents, Reliable belongs to a company owned by Christos Georgantzoglou, 81, a Greek businessman. The ship crossed the Atlantic for the first time shortly after Mr. Georgantzoglou’s company bought it last year, and has transmitted locations around eastern Caribbean Islands since, according to Windward’s analysis.

But Venezuela’s state oil company records reviewed by The New York Times show that Reliable was working for the Venezuelan government in the country during that time.

Mr. Georgantzoglou and his company did not respond to repeated requests for comment.

Their Venezuelan dealings appear to contradict a promise made by Greece’s powerful shipowners association in 2020 to stop transporting the country’s oil. The association did not respond to requests for comment.

Meanwhile, Reliable is still moving fuel around Venezuelan ports or loading crude onto Asia-bound ships in open waters to hide its origin, according to two Venezuelan oil businessmen, who asked not to be named for security reasons. It still broadcasts coordinates of a ship adrift in the Caribbean Sea.

Adriana Loureiro Fernandez and Eric Schmitt contributed reporting.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Exclusive: Wall Street revives Russian bond trading after U.S. go-ahead

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

NEW YORK, Aug 15 (Reuters) – Several major Wall Street banks have begun offering to facilitate trades in Russian debt in recent days, according to bank documents seen by Reuters, giving investors another chance to dispose of assets widely seen in the West as toxic.

Most U.S. and European banks had pulled back from the market in June after the Treasury Department banned U.S. investors from purchasing any Russian security as part of economic sanctions to punish Moscow for invading Ukraine, according to an investor who holds Russian securities and two banking sources.

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

Register now for FREE unlimited access to Reuters.com

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 return of the largest Wall Street firms, the details of the trades they are offering to facilitate and the precautions they are taking to avoid breaching sanctions are reported here for the first time.

Bank of America, Barclays, Citi and JPMorgan declined to comment.

A Jefferies spokesperson said it was “working within global sanctions guidelines to facilitate our clients’ needs to navigate this complicated situation.”

A source close to Deutsche Bank said the bank trades bonds for clients on a request-only and case-by-case basis to further manage down its Russia risk exposure or that of its non-U.S. clients, but won’t do any new business outside of these two categories.

STRANDED ASSETS

Some $40 billion of Russian sovereign bonds were outstanding before Russia began what it calls a “special military operation” in Ukraine in February. Roughly half was held by foreign funds. Many investors got stranded with Russian assets, as their value plummeted, buyers disappeared and sanctions made trading hard.

In May, two U.S. lawmakers asked JPMorgan and Goldman Sachs Group Inc (GS.N) for information about trades in Russian debt, saying they may undermine sanctions. read more The following month the Treasury’s Office of Foreign Assets Control banned U.S. money managers from buying any Russian debt or stocks in secondary markets, prompting banks to pull back.

Regulators have since taken steps to help ease the pain for investors.

The Treasury provided further guidance on July 22 to help settle default insurance payments on Russian bonds. It also clarified that banks could facilitate, clear and settle transactions of Russian securities if this helped U.S. holders wind down their positions. read more

Separately, European regulators have also eased rules to allow investors to deal with Russian assets by allowing them to put them into so-called side pockets on a case-by-case basis. read more

The price of some Russian bonds has jumped alongside the renewed trading activity since late July. That could make the trades more attractive to investors and also help companies that sold protection against Russian default.

For example, U.S. bond manager PIMCO – which was on the hook for a payout of around $1 billion after Russia defaulted on its dollar debt in June – could now save around $300 million, one investor estimated. PIMCO declined to comment.

“There’s some bid emerging for both local and external bonds for the first time in a while,” said Gabriele Foa, portfolio manager of the Global Credit Opportunities Fund at Algebris, who follows the market for Russian securities. “Some banks and brokers are using this bid to facilitate divestment of Russian positions for investors that want to get out.”

Reuters could not establish who was buying the bonds.

Reuters Graphics Reuters Graphics

LOTS OF RULES

Some banks are offering to trade Russian sovereign and corporate bonds, and some are offering to facilitate trades in bonds denominated in both roubles and U.S. dollars, according to the documents and the investor who holds Russian securities. But they are also demanding additional paperwork from clients and remain averse to taking on risk.

In a research update to clients on Wednesday, for example, Bank of America declared in capital letters in red: “Bank of America is now facilitating divestment of Russian sovereign and select corporate bonds.”

But it added that it would be acting as “riskless principal on client facilitation trades,” meaning a situation where a dealer buys a bond and immediately resells it. It also warned there were “a lot of rules around the process” which remained subject to “protocol and attestation.”

The approaches also differ among banks. In some cases, for example, banks are offering clients to help divest their holdings as well as other types of trades that would reduce exposure to Russian assets, while others are limiting trades to asset disposals only.

At times they are asking investors to sign documents prior to trade execution that would allow the banks to cancel trades if settlement does not go through and risks leaving the banks with Russian paper on their books, according to one of the documents and the investor.

One bank warned clients that settlements would take longer than usual.

Register now for FREE unlimited access to Reuters.com

Reporting by Davide Barbuscia in New York; Additional reporting by Rodrigo Campos.
Editing by Megan Davies, Paritosh Bansal and Edward Tobin

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Turkey says ship carrying first Ukrainian grain on track for safe arrival

  • Ukraine consults U.S. in using HIMARS launchers, official says
  • Comment prompts Kremlin to accuse U.S. of direct involvement
  • First wartime Ukraine grain export ship reaches Bosphorus Strait
  • U.S. sanctions target ex-Olympic gymnast seen as close to Putin

ISTANBUL/LONDON, Aug 2 (Reuters) – Russia on Tuesday accused the United States of direct involvement in the Ukraine war while the first ship carrying Ukrainian grain to world markets since Moscow’s invasion anchored safely off Turkey’s coast after a problem-free journey.

Russia said it was responding to comments by Vadym Skibitsky, Ukraine’s deputy head of military intelligence, about the way Kyiv had used U.S.-made and supplied High Mobility Artillery Rocket System (HIMARS) launchers based on what he called excellent satellite imagery and real-time information.

Skibitsky told Britain’s Telegraph newspaper there was consultation between U.S. and Ukrainian intelligence officials before strikes and that Washington had an effective veto on intended targets, though he said U.S. officials were not providing direct targeting information.

Register now for FREE unlimited access to Reuters.com

Russia’s defence ministry, headed by a close ally of President Vladimir Putin, said the interview showed that Washington was entangled in the conflict despite repeated assertions that it was limiting its role to arms supplies because it did not want a direct confrontation with Moscow. read more

“All this undeniably proves that Washington, contrary to White House and Pentagon claims, is directly involved in the conflict in Ukraine,” the Russian defence ministry said in a statement.

“It is the Biden administration that is directly responsible for all Kyiv-approved rocket attacks on residential areas and civilian infrastructure in populated areas of Donbas and other regions, which have resulted in mass deaths of civilians.”

There was no immediate reaction from the White House or Pentagon to the ministry’s assertions.

The Pentagon did deny, however, Moscow’s claims that Russia had destroyed six U.S.-made HIMARS since the war in Ukraine began on Feb. 24. Russia regularly claims it has hit HIMARS but has yet to show proof. read more

Ukraine and the West accuse Russia of carrying out devastating missile attacks on civilian targets on an almost daily basis. Both sides deny deliberately targeting civilians.

The accuracy and long range of missile systems provided by the West were intended to reduce Russia’s artillery advantage, but Ukrainian President Volodymyr Zelenskiy on Tuesday night said that despite those supplies, his country’s forces could not yet overcome Russian advantages in heavy guns and manpower.

“This is very much felt in combat, especially in the Donbas. … It is just hell there. Words cannot describe it,” he said.

A Russian diplomat said at the United Nations that the conflict in Ukraine does not warrant Russia’s use of nuclear weapons, but Moscow could decide to use its nuclear arsenal in response to “direct aggression” by NATO countries over the invasion. read more

At a nuclear non-proliferation conference, diplomat Alexander Trofimov said Moscow would only use nuclear weapons in response to weapons of mass destruction or a conventional weapons attack that threatened the existence of the Russian state.

“None of these two hypothetical scenarios is relevant to the situation in Ukraine,” Trofimov, a senior diplomat in the non-proliferation and arms control department of Russia’s foreign ministry, told the U.N. conference to review the Treaty on the Non-Proliferation of Nuclear Weapons.

SAFE PASSAGE

Meanwhile, a July 22 U.N.-brokered deal to unblock the export of Ukrainian grain had an initial success. Turkey said that the first loaded ship since Russia’s invasion more than five months ago was safely anchored off the Turkish coast. read more

The vessel, the Sierra Leone-flagged Razoni was at the entrance of the Bosphorus Strait, which connects the Black Sea to world markets, around 1800 GMT on Tuesday, some 36 hours after leaving the Ukrainian port of Odesa.

A delegation from the Joint Coordination Centre (JCC) in Istanbul, where Russian, Ukrainian, Turkish and U.N. personnel work, is expected to inspect the ship at 0700 GMT on Wednesday, Turkey’s Defence Ministry said.

It was loaded with 26,527 tonnes of corn.

“We hope that there will be some more outbound movement tomorrow,” U.N. spokesman Stephane Dujarric told reporters in New York.

Dujarric said there were about 27 ships in the three Ukrainian ports covered by the export deal that were ready to go.

The exports from one of the world’s top grain producers are intended to help ease a global food crisis.

“Our goal now is to have an orderly schedule so when one ship leaves port there should be other vessels – both those loading and those approaching the port,” Zelenskiy said.

For the safe passage deal to stick, there are other hurdles to overcome, including clearing sea mines and creating a framework for vessels to safely enter the war zone and pick up cargoes. read more

Known as Europe’s breadbasket, Ukraine hopes to export 20 million tonnes of grain held in silos and 40 million tonnes from the harvest now under way, initially from Odesa and nearby Pivdennyi and Chornomorsk.

Russia has called the Razoni’s departure “very positive” news. It has denied responsibility for the food crisis, saying Western sanctions have slowed its exports.

Adding to those sanctions, the United States on Tuesday targeted Alina Kabaeva, a former Olympic gymnast the Treasury Department described as having a close relationship with Putin. Putin has denied they are romantically linked.

The department said in a statement Kabaeva heads the National Media Group, a pro-Kremlin group of television, radio and print organizations.

Register now for FREE unlimited access to Reuters.com

Reporting by Reuters bureaux; writing by Andrew Osborn. Mark Heinrich and Alistair Bell; editing by Nick Macfie, Grant McCool, Howard Goller and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

How a New Corporate Minimum Tax Could Reshape Business Investments

WASHINGTON — At the center of the new climate and tax package that Democrats appear to be on the verge of passing is one of the most significant changes to America’s tax code in decades: a new corporate minimum tax that could reshape how the federal government collects revenue and alter how the nation’s most profitable companies invest in their businesses.

The proposal is one of the last remaining tax increases in the package that Democrats are aiming to pass along party lines in coming days. After months of intraparty disagreement over whether to raise taxes on the wealthy or roll back some of the 2017 Republican tax cuts to fund their agenda, they have settled on a longstanding political ambition to ensure that large and profitable companies pay more than $0 in federal taxes.

To accomplish this, Democrats have recreated a policy that was last employed in the 1980s: trying to capture tax revenue from companies that report a profit to shareholders on their financial statements while bulking up on deductions to whittle down their tax bills.

reduce their effective tax rates well below the statutory 21 percent. It was originally projected to raise $313 billion in tax revenue over a decade, though the final tally is likely to be $258 billion once the revised bill is finalized.

would eliminate this cap and extend the tax credit until 2032; used cars would also qualify for a credit of up to $4,000.

Because of that complexity, the corporate minimum tax has faced substantial skepticism. It is less efficient than simply eliminating deductions or raising the corporate tax rate and could open the door for companies to find new ways to make their income appear lower to reduce their tax bills.

Similar versions of the idea have been floated by Mr. Biden during his presidential campaign and by Senator Elizabeth Warren, Democrat of Massachusetts. They have been promoted as a way to restore fairness to a tax system that has allowed major corporations to dramatically lower their tax bills through deductions and other accounting measures.

According to an early estimate from the nonpartisan Joint Committee on Taxation, the tax would most likely apply to about 150 companies annually, and the bulk of them would be manufacturers. That spurred an outcry from manufacturing companies and Republicans, who have been opposed to any policies that scale back the tax cuts that they enacted five years ago.

Although many Democrats acknowledge that the corporate minimum tax was not their first choice of tax hikes, they have embraced it as a political winner. Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, shared Joint Committee on Taxation data on Thursday indicating that in 2019, about 100 to 125 corporations reported financial statement income greater than $1 billion, yet their effective tax rates were lower than 5 percent. The average income reported on financial statements to shareholders was nearly $9 billion, but they paid an average effective tax rate of just 1.1 percent.

“Companies are paying rock-bottom rates while reporting record profits to their shareholders,” Mr. Wyden said.

told the Senate Finance Committee last year. “This behavioral response poses serious risks for financial accounting and the capital markets.”

Other opponents of the new tax have expressed concerns that it would give more control over the U.S. tax base to the Financial Accounting Standards Board, an independent organization that sets accounting rules.

“The potential politicization of the F.A.S.B. will likely lead to lower-quality financial accounting standards and lower-quality financial accounting earnings,” Ms. Hanlon and Jeffrey L. Hoopes, a University of North Carolina professor, wrote in a letter to members of Congress last year that was signed by more than 260 accounting academics.

the chief economist of the manufacturing association. “Arizona’s manufacturing voters are clearly saying that this tax will hurt our economy.”

Ms. Sinema has expressed opposition to increasing tax rates and had reservations about a proposal to scale back the special tax treatment that hedge fund managers and private equity executives receive for “carried interest.” Democrats scrapped the proposal at her urging.

When an earlier version of a corporate minimum tax was proposed last October, Ms. Sinema issued an approving statement.

“This proposal represents a common sense step toward ensuring that highly profitable corporations — which sometimes can avoid the current corporate tax rate — pay a reasonable minimum corporate tax on their profits, just as everyday Arizonans and Arizona small businesses do,” she said. In announcing that she would back an amended version of the climate and tax bill on Thursday, Ms. Sinema noted that it would “protect advanced manufacturing.”

That won plaudits from business groups on Friday.

“Taxing capital expenditures — investments in new buildings, factories, equipment, etc. — is one of the most economically destructive ways you can raise taxes,” Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, said in a statement. He added, “While we look forward to reviewing the new proposed bill, Senator Sinema deserves credit for recognizing this and fighting for changes.”

Emily Cochrane contributed reporting.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Biden Administration’s Bid to Cap Russia Oil Prices Faces Resistance

WASHINGTON — The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, posing a challenge for the U.S.-led effort to drain President Vladimir V. Putin’s war chest and stabilize global energy prices.

The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. The Biden administration fears that the combination of a European Union embargo on Russian oil imports and a ban on the insurance and financing of Russian oil shipments will send prices soaring by taking millions of barrels of that oil off the market.

But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.

Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”

He added: “We’ve said it won’t work. We’ve explained to everybody why.”

That has not deterred Ms. Yellen and her top aides, who have been crisscrossing the globe to make their case with international counterparts, banks and insurers that an oil price cap can — and must — work at a moment of rapid inflation and the risk of recession.

“At a time of global anxiety over high prices, a price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs,” Ms. Yellen said in July.

The Biden administration is trying to mitigate fallout from sanctions adopted by the European Union in June, which would ban imports of Russian oil and the financing and insuring of Russian oil exports by year’s end. Britain was expected to enact a similar ban but has not yet done so.

not solve the world’s oil supply problems. European officials, who have been skeptical, continue to say they are analyzing its viability.

restricted natural gas flows to parts of Europe in retaliation for sanctions, would curb oil exports because of their importance to its economy.

senior fellow at the Atlantic Council who works in the financial services industry, said of Russia’s cooperation with a price cap. “If that were the case, he wouldn’t have invaded Ukraine in the first place.”

But proponents believe that if the European Union bans insurance transactions, an oil price cap may be the best chance to mitigate the economic fallout.

John E. Smith, former director of the foreign assets control unit, said the key was ensuring that financial services firms and maritime insurers were not responsible for vetting every oil transaction, as well as providing guidance on complying with the sanctions.

“The question is will enough jurisdictions agree on the details to move this forward,” said Mr. Smith, who is now co-head of Morrison & Foerster’s national security practice. “If they do, it could be a win for everyone but Russia.”

Matina Stevis-Gridneff contributed reporting from Brussels.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

U.S. to sell additional 20 million barrels of oil from strategic reserve

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

Register now for FREE unlimited access to Reuters.com

WASHINGTON, July 26 (Reuters) – The Biden administration on Tuesday said it will sell an additional 20 million barrels of oil from the Strategic Petroleum Reserve as part of a previous plan to tap the facility to calm oil prices boosted by Russia’s invasion of Ukraine and as demand recovers from the pandemic.

The administration said in late March it would release a record 1 million barrels of per day of oil for six months from the SPR, held in hollowed-out salt caverns on the coasts of Louisiana and Texas.

The United States has already sold 125 million barrels from the reserve with nearly 70 million barrels already delivered to purchasers, a senior administration official told reporters.

Register now for FREE unlimited access to Reuters.com

The SPR releases have been a “supply lifeline” to oil and refining companies as the industry continues to get oil production back online after declines during the peak of the COVID-19 pandemic, the official said.

The U.S. Energy Information Administration, the statistics arm of the Energy Department, said this month that U.S. oil output will rise to more than 11.9 million barrels per day (bpd) in 2022 and to nearly 12.8 million bpd in 2023, from about 11.2 million bpd in 2021. That compares with a record near 12.3 million bpd in 2019.

The United States will take bids in autumn to begin the process of buying back 60 million barrels of crude for reserve, a first step in replenishing the stockpile after the 180 million barrel release, the Department of Energy said in May. read more

The department will soon propose a rule to help put oil back into the SPR, where levels have sunk to 475.5 million barrels, the lowest since June 1985, by allowing it to enter forward contracts to purchase oil in future years at fixed, preset prices.

“What it means in practice is that producers would have more certainty about future demand for their product, and that would encourage investment in production today,” a senior U.S. official told reporters.

Oil purchases to replenish the SPR will not be competing with demand for oil in the near term as they will likely take place after fiscal year 2023, an official told reporters.

A U.S. Treasury Department analysis showed that the SPR releases, along with coordinated releases from international partners, have reduced gasoline prices at the pump by as much as 40 cents per gallon, compared to what they otherwise would have been.

International oil prices fell on Tuesday on the SPR sale and on consumer concerns about inflation and interest rates. Brent crude futures settled at $104.40 a barrel, down 75 cents.

Register now for FREE unlimited access to Reuters.com

Reporting by Timothy Gardner, Doina Chiacu and Jeff Mason; Editing by Paul Simao, Andrea Ricci and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

U.S. issues sanctions related to Iran oil

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

Model of petrol pump is seen in front of U.S. and Iran flag colors in this illustration taken March 25, 2022. REUTERS/Dado Ruvic/Illustration

Register now for FREE unlimited access to Reuters.com

WASHINGTON, July 6 (Reuters) – The U.S. Treasury Department on Wednesday issued fresh sanctions related to Iranian oil, the department’s website showed.

Register now for FREE unlimited access to Reuters.com

Reporting by Kanishka Singh in Washington; Editing by Doina Chiacu

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Russia slides towards default as payment deadline expires

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

The clock on Spasskaya tower showing the time at noon, is pictured next to Moscow?s Kremlin, and St. Basil?s Cathedral, March 31, 2020. REUTERS/Maxim Shemetov

Register now for FREE unlimited access to Reuters.com

  • Grace period runs out on $100 mln interest payment due May 27
  • Some Taiwanese bondholders did not received payment on Monday – sources
  • Russia says it has funds to pay, sanctions are to blame
  • Lapsed U.S. waiver, EU sanctions on NSD scupper Russia payments
  • CDS committee already declared ‘credit event’ occurred

LONDON, June 27 (Reuters) – Russia looked set for its first sovereign default in decades as some bondholders said they had not received overdue interest on Monday following the expiry of a key payment deadline a day earlier.

Russia has struggled to keep up payments on $40 billion of outstanding bonds since its invasion of Ukraine on Feb. 24, as sweeping sanctions have effectively cut the country off from the global financial system and rendered its assets untouchable to many investors.

The Kremlin has repeatedly said there are no grounds for Russia to default but it is unable to send money to bondholders because of sanctions, accusing the West of trying to drive it into an artificial default.

Register now for FREE unlimited access to Reuters.com

Russia’s efforts to avoid what would be its first major default on international bonds since the Bolshevik revolution more than a century ago hit a insurmountable roadblock in late May when the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) effectively blocked Moscow from making payments.

“Since March we thought that a Russian default is probably inevitable, and the question was just when,” Dennis Hranitzky, head of sovereign litigation at law firm Quinn Emanuel, told Reuters. “OFAC has intervened to answer that question for us, and the default is now upon us.”

While a formal default would be largely symbolic given Russia cannot borrow internationally at the moment and doesn’t need to thanks to plentiful oil and gas export revenues, the stigma would probably raise its borrowing costs in future.

The payments in question are $100 million in interest on two bonds, one denominated in U.S. dollars and another in euros , Russia was due to pay on May 27. The payments had a grace period of 30 days, which expired on Sunday.

Russia’s finance ministry said it made the payments to its onshore National Settlement Depository (NSD) in euros and dollars, adding it has fulfilled obligations.

Some Taiwanese holders of the bonds had not received payments on Monday, sources told Reuters. read more

For many bondholders, not receiving the money owed in time into their accounts constitutes a default.

With no exact deadline specified in the prospectus, lawyers say Russia might have until the end of the following business day to pay the bondholders.

SMALL PRINT

The legal situation surrounding the bonds looks complex.

Russia’s bonds have been issued with an unusual variety of terms, and an increasing level of ambiguities for those sold more recently, when Moscow was already facing sanctions over its annexation of Crimea in 2014 and a poisoning incident in Britain in 2018.

Rodrigo Olivares-Caminal, chair in banking and finance law at Queen Mary University in London, said clarity was needed on what constituted a discharge for Russia on its obligation, or the difference between receiving and recovering payments.

“All these issues are subject to interpretation by a court of law, but Russia has not waived any of its sovereign immunity and has not submitted to the jurisdiction of any court in any of the two prospectuses,” Olivares-Caminal told Reuters.

In some ways, Russia is in default already.

A committee on derivatives has ruled a “credit event” had occurred on some of its securities, which triggered a payout on some of Russia’s credit default swaps – instruments used by investors to insure exposure to debt against default. This was triggered by Russia failing to make a $1.9 million payment in accrued interest on a payment that had been due in early April. read more

Until the Ukraine invasion, a sovereign default had seemed unthinkable, with Russia being rated investment grade up to shortly before that point. A default would also be unusual as Moscow has the funds to service its debt.

The OFAC had issued a temporary waiver, known as a general licence 9A, in early March to allow Moscow to keep paying investors. It let it expire on May 25 as Washington tightened sanctions on Russia, effectively cutting off payments to U.S. investors and entities.

The lapsed OFAC licence is not the only obstacle Russia faces as in early June the European Union imposed sanctions on the NSD, Russia’s appointed agent for its Eurobonds. read more

Moscow has scrambled in recent days to find ways of dealing with upcoming payments and avoid a default.

President Vladimir Putin signed a decree last Wednesday to launch temporary procedures and give the government 10 days to choose banks to handle payments under a new scheme, suggesting Russia will consider its debt obligations fulfilled when it pays bondholders in roubles.

“Russia saying it’s complying with obligations under the terms of the bond is not the whole story,” Zia Ullah, partner and head of corporate crime and investigations at law firm Eversheds Sutherland told Reuters.

“If you as an investor are not satisfied, for instance, if you know the money is stuck in an escrow account, which effectively would be the practical impact of what Russia is saying, the answer would be, until you discharge the obligation, you have not satisfied the conditions of the bond.”

Register now for FREE unlimited access to Reuters.com

Reporting by Karin Strohecker; Additional reporting by Emily Chan in Taipeh and Sujata Rao in London; Editing by David Holmes, Emelia Sithole-Matarise & Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

China’s holdings of U.S. Treasuries skid to 12-year low; Japan also cuts holdings

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

U.S. and Chinese flags are seen in front of a U.S. dollar banknote featuring American founding father Benjamin Franklin and a China’s yuan banknote featuring late Chinese chairman Mao Zedong in this illustration picture taken May 20, 2019. REUTERS/Jason Lee/Illustration/File Photo

Register now for FREE unlimited access to Reuters.com

NEW YORK, June 15 (Reuters) – China’s holdings of U.S Treasuries tumbled in April to their lowest since May 2010, data showed on Wednesday, with Chinese investors likely cutting losses as Treasury prices fell after Federal Reserve officials signaled sizable rate hikes to temper soaring inflation.

Chinese holdings dropped to $1.003 trillion in April, down $36.2 billion from $1.039 trillion the previous month, according to U.S. Treasury Department figures. China’s stock of Treasuries in May 2010 was $843.7 billion, data showed.

The reduction in Treasury holdings may also have been aimed at diversifying China’s foreign exchange holdings, analysts said.

Register now for FREE unlimited access to Reuters.com

The Chinese sales contributed to a drop in overall foreign holdings of Treasuries in April that helped propel yields higher. U.S. benchmark 10-year Treasury yields started April with a yield of 2.3895% , and surged roughly 55 basis points to 2.9375% by the end of the month.

Japan’s holdings of U.S. Treasuries fell further in April to their lowest since January 2020, amid a persistent decline in the yen versus the dollar, which may have prompted Japanese investors to sell U.S. assets to benefit from the exchange rate.

Japanese holdings fell to $1.218 trillion in April, from $1.232 trillion in March. Japan remained the largest non-U.S. holder of Treasuries.

Overall, foreign holdings of Treasuries slid to 7.455 trillion, the lowest since April 2021, from $7.613 trillion in March.

On a transaction basis, U.S. Treasuries saw net foreign outflows of $1.152 billion in April, from net new foreign inflows of $48.795 billion in March. This was the first outflow since October 2021.

The Federal Reserve, at its policy meeting in March, raised benchmark interest rates by a quarter of a percentage point.

It lifted rates by 50 bps in May, but at the June policy meeting on Wednesday lifted rates by a hefty 75 bps to stem a disruptive surge in inflation. The Fed also projected a slowing economy and rising unemployment in the months to come. read more

In other asset classes, foreigners sold U.S. equities in April amounting to $7.1 billion, from net outflows of $94.338 billion in March, the largest since at least January 1978, when the Treasury Department started keeping track of this data. Foreign investors have sold stocks for four consecutive months.

U.S. corporate bonds, on the other hand, posted inflows in April of $22.587 billion, from March’s $33.38 billion, the largest since March 2021. Foreigners were net buyers of U.S. corporate bonds for four straight months.

U.S. residents, meanwhile, decreased their holdings of long-term foreign securities, with net sales of $36.7 billion, data showed.

Register now for FREE unlimited access to Reuters.com

Reporting by Gertrude Chavez-Dreyfuss; Editing by Paul Simao and Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<