Russia’s payment on another bond is handled by US bank -source | The mighty 790 KFGO

By Megan Davies

NEW YORK (Reuters) – Russia’s coupon payment on a sovereign bond maturing in 2029 was handled by correspondent bank JPMorgan Chase & Co, a source said on Monday, the second time in recent days the country appears have avoided the defect.

Russia was due to make a $66 million payment to bondholders on Monday.

Last week, it paid the interest due on two sovereign bonds, lifting doubts about its willingness and ability to service foreign debt after harsh sanctions were imposed by Western countries following its invasion of Israel. Ukraine.

By making the payment, Russia avoided its first default, so far, since the 1998 financial crisis and its first on international obligations since the 1917 revolution.

JPMorgan worked Monday with the US Treasury Department on the necessary approvals, the source familiar with the matter said.

The payment has moved to the next stage before the money is released to bondholders, the source added. Reuters could not find out which bank was acting as paying agent on the bond.

JPMorgan last week processed the payment as a correspondent bank and remitted it to Citigroup Inc, which, as payment agent, distributed the funds to bondholders.

Russia has 15 outstanding international bonds with a face value of about $40 billion. Prior to the Ukraine crisis, around $20 billion was held by investment funds and fund managers outside of Russia.

The next test of the country is a payment of $102 million on March 28 and after that, on March 31, there is a payment of $447 million that must be made in dollars. Its biggest payment of the year – and its first full “principal” repayment, of $2 billion – is due on April 4.

Even if Russia is willing to pay, there could be complications in the coming weeks and months, particularly for bonds that must be managed in dollars, after a temporary license issued by the U.S. Bureau expires. of Foreign Assets Control on May 25. have nearly $2 billion in external sovereign bond payments to make before the end of the year.

If Russia fails to make any of its bond payments within the defined grace periods, or pays in rubles when dollars or euros are specified, it will be a default.

The Russian ruble stabilized on Monday and OFZ Treasuries returned to trading, albeit in a volatile fashion. Stocks and bonds last traded on the Moscow Stock Exchange on Feb. 25, and the central bank has yet to say when stock trading can resume. Russia invaded Ukraine on February 24, calling it a “special operation”.

(Reporting by Megan Davies; Editing by Paritosh Bansal, Christopher Cushing and Muralikumar Anantharaman)

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