Russia attempts last-ditch dollar bond payments to try to avert historic default

cnbc.com:

Russia's Finance Ministry said Friday that it had attempted overdue dollar payments on its international debt obligations, a dramatic U-turn which could potentially avoid a historic default for the country.

The ministry said it had made a payment of $564.8 million on a 2022 eurobond and a payment of $84.4 million on a 2042 eurobond, according to Reuters, with both in dollars — which was originally stipulated on the debt agreements.

The funds have reportedly been channeled to the London branch of Citibank but it's unclear whether they will reach their intended recipients. The payments were due to be made in April and had entered a 30-day grace period before official default on May 4.

It had previously attempted to make the payments on its dollar-denominated bonds in Russian rubles.

Around half of Russia's vast foreign currency reserves have been frozen by punitive economic sanctions imposed by international powers in the wake of its invasion of Ukraine.

On April 4, Russia made a payment on the two sovereign bonds that are due to mature in 2022 and 2042 in the local currency rather than in dollars as mandated under the terms of its contract.

In a recent statement, ratings agency Moody's said this deviation from the payment terms relative to the original bond contracts may be considered a default if not remedied by the end of the monthlong grace period on May 4.

«The bond contracts have no provision for repayment in any other currency other than dollars. Although eurobonds issued after 2018 allow under certain conditions for repayments to be made in rubles, those issued before 2018 (including the 2022 and 2042 bonds) either do not contain this alternative currency clause or allow for repayments to be made only in other hard