Russia says the dollars for bond payments are with Citigroup — but investors are left waiting

• Russia said it had sent the $117 million to meet its coupon payments on its bonds, and said the funds were with Citigroup.
• However, the cash was yet to make its way to some bondholders as of Friday morning.

Russia's finance ministry said Friday that it had sent $117 million to meet the interest payments on two of its dollar bonds, and that the cash was with Citigroup.

Confusion reigned however, as some bondholders reported that they were yet to receive their money.

One bondholder told Insider they had still not received any cash as of 8 a.m. ET. They speculated that extra documentation was holding the process up.

Bloomberg reported that five investors were yet to receive anything on Friday morning. However, Reuters reported that some creditors had received their payments.

Despite the delay, signs of progress caused investors to dial down their bets that Russia will default on its foreign currency debts for the first time since after the Bolshevik revolution in 1918.

The prices of the two Russian bonds in question, which mature in 2023 and 2043, rose Friday after surging Thursday. They are still trading at around 50% of face value, however, reflecting risks that the dollar payments may not make it, or that future payments might be stymied.

Speculation grew earlier this week that Russia was teetering on the edge of default after the government said it may be forced to pay in rubles as a result of Western sanctions. The US and its allies have united to cut the country out of much of the global financial system following its invasion of Ukraine.

Despite its warning, Russia sent the dollar payment to JPMorgan, which has a foreign correspondent banking relationship with the country, according to a person familiar with the matter.

JPMorgan processed the $117 million payment and sent the money through to Citi, which is the paying agent responsible for getting the money to investors, the person said.

Citigroup and JPMorgan declined to comment on the situation.

On Thursday, ratings agency S&P slashed Russia's credit rating even deeper into "junk" territory despite the government's assurances it had paid up.

S&P's analysts said "technical difficulties" stemming from Western sanctions had complicated Russia's ability to meet the bond payments. It said such problems could well continue.

"We think that debt service payments on Russia's Eurobonds due in the next few weeks may face similar technical difficulties," they said. A Eurobond is another name for a foreign currency bond.

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