- The US Treasury upped its sanctions against Russia on Monday by prohibiting US investors from buying Russian securities.
- The updated guidance from the Treasury Department says US investors can no longer purchase Russian debt or stocks in the secondary market.
- Russia’s central bank had already closed its stock market to foreign investors in the early days of its war against Ukraine.
The US Treasury increased its sanctions against Russia on Tuesday, now prohibiting US investors from buying all Russian debt and equity securities.
According to updated guidance from the Treasury, US investors can no longer purchase Russian debt or stocks in secondary markets. Buying newly issued stocks and bonds was already banned. The new trading restrictions apply to both ruble and non-ruble denominated debt, as well as both corporate and sovereign debt.
Executive orders 14066, 14068, and 14071, which updated the guidance, say US investors now only have the option of holding, selling, or transferring the Russian securities.
Removing a big chunk of global buyers from the equation means it will likely be harder to sell any Russian debt or stocks, and could put further downward pressure on Russian security prices. The move could also make it harder for Russia and its domestic companies to raise debt from foreign investors.
Russia had already closed its stock market to foreign investors in the early days of its war against Ukraine, in an attempt to stop and reverse the sharp drop the country saw in stock prices.
“Consistent with our goal to deny Russia the financial resources it needs to continue its brutal war against Ukraine, Treasury has made clear that U.S. persons are prohibited from making new investments in the success of Russia, including through purchases on the secondary market,” a Treasury spokesperson told The Wall Street Journal.
The updated sanction only adds to a long list of financial and economic sanctions the US and other Western countries have imposed on Russia in an attempt to pressure its President Vladimir Putin to end his war against Ukraine. So far, the sanctions haven’t worked in that regard, as Russia’s army continues to fight in Eastern Ukraine.
Even more pressure against Russia from a financial perspective is imminent, as the country is less than a month away from defaulting on its debt. The country missed its bond payment on May 27 after the US Treasury prohibited US banks from accepting bond payments. Russia’s 30-day grace period on that debt payment deadline ends June 26.