Russia-related General License 46 - Authorizing Transactions in Support of an Auction Process to Settle Certain Credit Derivative Transactions Prohibited by Executive Order 14071 (July 22, 2022)

Date issued: Jul. 22 2022

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TURBOFAC Commentary (769 words)

Notes:

1) BACKGROUND

GL 46 is an extremely unusual license, unique to the RuHSR/EO 14071. As essential background, note that (i) trading in Russian sovereign debt (and derivatives thereof) is prohibited by EO 14071 (see comments to Russia-related General License 45), and that Russia has been determined to have defaulted on some of its sovereign debt, thereby triggering a "credit event" for the purposes of credit default swaps (CDSs) linked to certain Russian sovereign debt.

A sovereign default would normally result in a "credit event auction," where bonds related to the defaulting issuer would be traded in a closed auction to facilitate settlement of CDSs linked to the defaulted obligation. See https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr372.pdf. However, prior to the issuance of the license, EO 14071 made participation in such...