Russia may have averted a sovereign bond default, with coupon payments due this week received and processed by correspondent bank JPMorgan, Reuters reported Thursday, citing a source familiar with the situation.
JPMorgan then made the onward credit payment to paying agent Citi, the report said, citing the source, noting the payment was in U.S. dollars.
JPMorgan had to check with authorities before processing the payments, Reuters reported, citing the source. Sanctions imposed on Russia prohibit U.S. banks from correspondent banking, the report said.
Cut Off From Swift Network
Concerns had emerged earlier this week that Russia might need to make its U.S. dollar debt payments in roubles, after Russian banks were cut off from the Swift payment network due to sanctions imposed after the country invaded Ukraine in late February. Payment in roubles would have constituted a default.
Russia’s finance ministry said Thursday it made debt payments due this week, with $117 million in coupon payments due on Wednesday, the report said. Some creditors had received payments, Reuters reported, citing market sources, which indicated the country has so far averted its first external bond default in a century.
The country has another $615 million in coupon payments falling due this month, while the next principal payment is due 4 April when a $2 billion bond matures, Reuters reported.
Reuters noted that some Russian dollar bonds sold after the country was sanctioned in 2014 over its annexation of Crimea have the rouble listed as an alternative payment option.
