Russia looked poised to swerve a looming sovereign default after overdue payments on two of its sovereign Eurobonds were sent to some of its creditors, a source familiar with the situation said on Tuesday.
Russia had made what appeared to be a late U-turn to avoid a default on the bonds after the finance ministry announced on Friday it had paid nearly $650 million it owed in coupons and principal to holders of the bonds ahead of the grace period expiring on May 4.
A senior U.S. official confirmed Moscow had made the payment without using reserves frozen in the United States, adding that the exact origin of the funds was unclear.
The source, speaking on condition of anonymity, said funds had been transferred to some bondholders on Monday.
Russia’s $40 billion of international bonds have become the focus of a financial standoff between Western capitals, which have imposed sweeping sanctions on the country over its war in Ukraine, and Moscow, which has introduced counter measures.
The curbs have complicated debt payments on sovereign and corporate bonds, with a number of corporates and state-owned entities, such as Russian Railways, failing to transfer funds in time.
The payments due on April 4 cover a bond that had matured that day as well as interest payments on one due in 2024.
Attention is now shifting to upcoming payments with Russia due to pay coupons on May 27 on a dollar-denominated bond issued in 2016 and a euro-denominated bond issued in 2021.
That payment is due after a temporary license issued by the U.S. Office of Foreign Assets Control (OFAC) and allowing transactions related to debt payments by the Russian sovereign expires on May 25. The U.S. Treasury has not commented on whether that deadline will be extended.
