Russia avoids default once again as $447 million dollar bond payment goes through even after clearinghouse blocks account
Russiaavoided a defaultas one of its dollar-denominated bondpayments went through on Thursday. JPMorgan, Russia's foreign correspondent bank, processed the payments, a source told Insider.
Russia again avoided a bond default Thursday after roughly $447 million in payments for dollar-denominated debt went through.
JPMorgan, which is Russia's foreign correspondent bank, processed the payment after checking with the 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 slapped on Russia following its invasion of
Russia has so far kept up payments on its foreign currency denominated bonds, despite major ratings agencies saying in early March that a debt default was highly likely.
The country last defaulted fully on its foreign bonds in 1918, when communist revolutionaries refused to honor the Tsar's debts.
The payment comes even though the government's ability to pay its foreign debts was thrown into doubt last week when Clearstream, a company that settles international payments, blocked Russia's National Settlement Depository account.
Further questions were asked when Russia offered to buy back a $2 billion bond, which matures April 4, in rubles.
However, the Finance Ministry later clarified that it had offered to pay in rubles to ensure that the money reaches domestic bondholders. Bloomberg reported that foreign holders would receive dollars.
Russia's commitment to making its foreign payments has surprised some analysts. The country has already been frozen out of global capital
"It has been quite clear that the government doesn't want to default at the moment," Althea Spinozzi, senior fixed income strategist at Saxo Bank, told Insider.
"Russia wants to keep the capability, wants to continue to keep a good credit profile because once it can access international markets again it wants physically to have a good relationship with investors," she said.
Investors will be keeping a close eye on the upcoming $2 billion bond maturity payment on April 4. The government must then make a further $1.9 billion worth of payments before the end of the year.
Read more: The founder of a commodities ETF provider managing over $1.5 billion shares his outlook for 8 assets that have experienced major supply chain disruption and elevated prices during the Ukraine crisis
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