Russia made the move to avoid bankruptcy on Friday as it made a series of already delayed payments of its international debt in dollars, despite having previously promised to pay it in rubles as long as its reserves remained frozen.
Russia’s $ 40 billion international bonds have become the focus of the one-on-one and one-on-one financial game that has developed over a possible bankruptcy.
Russia’s finance ministry said it had paid $ 564.8 million for a 2022 Eurobond and $ 84.4 million for another 2042 bond in dollars, the currency listed on the bonds.
A senior US official confirmed that Moscow had made the payment without making use of its reserves that had been frozen in the United States, although it did not say where exactly the funds were coming from.
“We have not approved any transaction related to their frozen funds in the US,” the US official said. “They kind of backed down on this issue to avoid bankruptcy, and that’s a good thing.”
Russia’s finance ministry says it has channeled the required funds to a London branch of Citibank, one of the so-called bondholders whose job it is to disburse them to investors who initially lent money to Moscow.
Citibank declined to comment on the matter.
“Payments were made in the currency of the respective Eurobonds – in US dollars,” the Russian Finance Ministry said in a statement. “Thus, the service obligations of the state Eurobonds were fulfilled.”
Russia has not faced any bankruptcy since the financial collapse of 1998 and has not experienced major bankruptcy in international or “foreign” markets since the Bolshevik Revolution of 1917.
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