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US Sanctions Create Wealth Transfer on Russian Bonds

High Value-Add Analysis - Jun 2022 (#00543)
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The US Government’s sanctions on the Russian government and corporate bonds have created a massive wealth transfer from bondholders to those issuers, which is $86 billion of investor losses and an $86 billion extraordinary windfall to the issuers. 

The US Government, in newly issued regulations, prohibits Americans from receiving interest and principal payments due on their holdings of Russian bonds. The sanctions have blocked international clearing houses from transferring funds received from Russia to Americans.

Since May 27, 2022 approximately $100 million in interest payments made on Russian Government bonds to Euroclear clearing house have been blocked by US Government sanctions from being distributed to Americans.  On June 24, 2022 an additional approximately $160 million in interest payments at this point look to be blocked by the US Government as well.  Additional payments will be blocked on Russian corporate bonds.