Portugal Colonial - Risk of imminent Russian debt default appears to diminish

The Russian government faced a March 16 deadline to pay $117 million in interest on two dollar-denominated bonds, an obligation that looked vulnerable following a wave of Western sanctions imposed following Russia's invasion of Ukraine.

The finance ministry said in a statement that a payment order worth $117.2 million "was executed" after it was sent to a bank on Monday.

JPMorgan received a payment from the Central Bank of Russia, which the bank processed after checking with US authorities, a person familiar with the matter told AFP.

JPMorgan, a corresponding or intermediary bank, then sent the funds to Citigroup, the agent in charge of paying bond holders, said the person, who did not specify the amount received.

JPMorgan and Citigroup each declined AFP's requests for comment.

Russia was at risk of its first foreign debt default in more than a century, though there is a 30-day grace period to provide the funds to creditors.

Western sanctions have crippled the Russian banking sector and financial system, and precipitated a collapse of the ruble. The penalties include efforts to freeze $300 billion of Russia's foreign currency reserves held abroad.

A payment in rubles would constitute a default, according to Fitch Ratings, which warned last week that the possibility was "imminent."

The US Treasury confirmed that exemptions allowed under the sanctions imposed by Washington include interest payments on government bonds issued before March 1.

Russia last defaulted on foreign currency-held debt in 1918, when Bolshevik revolution leader Vladimir Lenin refused to recognize the debts of the deposed tsar's regime.

The government missed payments on domestic, ruble-denominated debt in 1998 amid a financial crisis.

- 'Necessary means' -

But Moscow financial condition improved dramatically since then, thanks to some $600 billion in reserves stockpiled largely from oil and natural gas sales.

Russia's government said Thursday the debt payment was made in a foreign currency, without specifying which.

The finance ministry added that it will provide "additional information" on the crediting of the funds. Russia previously said it had asked an American bank to process the payments.

Kremlin spokesman Dmitry Peskov said Russia has "all the necessary means" to avoid a default.

"Any default that could arise would be purely artificial in nature," Peskov told reporters.

Moscow's next debt payment of $66 million is due on March 21, according to a JPMorgan analyst report earlier this month.

But that payment can be made in several currencies, including rubles.

B.Godinho--PC