Russian creditors have started receiving Russian bond payments, lifting the cloud of potential Russia’s debt default.
Reuters reports that some creditors have received payment of Russian bond coupons which fell due this week in US dollars.
Sources cited in the Reuters’ report said two creditors have already received their due, while a number of others are expect to receive theirs soon. The expectations is hinged on the fact that they had already received tranches on their other hard currency bonds from a number of Russian companies in recent days.
RT reports that earlier in the day, another source said that Russia’s correspondent bank, JPMorgan, had processed the funds sent by the Russian government and credited it to the paying agent, Citigroup, which is to distribute it to bondholders after a standard checking procedure.
The Russian Finance Ministry had announced earlier in the week that it had sent a payment order on its two dollar-denominated sovereign bonds due on March 16 with the total amount of $117.2 million – the first payment due since Moscow launched a military operation in Ukraine.
In late February, Western states blocked their citizens from engaging in any transactions involving Russia’s central bank. However, no restrictions have so far targeted operations to service Russia’s external debt.
In early March, the US Office of Foreign Assets Control authorized transactions for US persons for “the receipt of interest, dividend, or maturity payments in connection with debt or equity” issued by Russia. The exemption is to last until May 25.
There was wide speculation in the media that Russia would default for the first time in a century, as much of its foreign currency holdings have been frozen by the US, the EU, and a number of other countries.
Several other Russia bond couples will be due ins a short time. The country is expected to pay a US$615 million coupon by the end of March, and US$2 billion on April 4.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur