- Russia avoided default as one of its dollar-denominated bond payments continued on Thursday.
- A source told Insider that the payments were processed by JPMorgan, the Russian foreign correspondent.
- Last week, Clearstream blocked Russia from the National Settlement Depository, which receives foreign bond payments.
Russia again avoided default on Thursday after nearly $447 million of dollar-denominated debt was paid off.
JPMorgan, a foreign correspondent bank to Russia, processed the payment after verification by US authorities, a person familiar with the matter told Insider. JPMorgan declined to comment.
Bondholders can now expect to receive $87.5 million in coupons and $359 million in principal payments.
However, Western sanctions imposed on Russia in the wake of its invasion of Ukraine mean money is slowly flowing through the system, as banks seek US Treasury approval to process the money.
Russia has so far continued to make payments on its foreign-currency bonds, although major rating agencies said in early March that the debt default was very likely.
The last time the country defaulted in full on its foreign bonds was in 1918, when communist revolutionaries refused to pay the Tsar’s debts.
The payment comes even though the government’s ability to repay its foreign debt was called into question last week when Clearstream, an international payments settlement company, blocked Russia’s national settlement deposit account.
More questions were raised when Russia offered to buy back $2 billion in bonds, due on April 4, in rubles.
Russia’s commitment to its foreign payments has surprised some analysts. The country has already been pushed out of the global capital markets, the traditional punishment for governments that default on their debts.
“It has been quite clear that the government does not want to default at the moment,” Althea Spinozzi, chief fixed income analyst at Saxo Bank, told Insider.
“Russia wants to maintain capacity, it wants to continue to maintain a good credit profile because once it has access to international markets again, it really wants to have a good relationship with investors,” she said.
Investors will closely watch the upcoming $2 billion bond batch on April 4. $1.9 billion in payments before the end of the year.
The Russian Central Bank has Scrambled to keep the economy afloat Since the war in Ukraine began. It doubled interest rates in February and reduced foreigners moving money, among other moves.
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