Moscow completes sovereign debt payment, avoids first default in a century

• Russia was due to pay $117 million on two dollar-denominated bonds

• The West has placed strict sanctions from the war in Ukraine on Russian bank

Russian Finance Ministry announced that it had completed a foreign bond payment averting the country’s first default on its foreign debt obligations since 1918, during the Bolshevik Revolution.

Russia was due to pay $117 million on two dollar-denominated bonds. JP Morgan and Chase told Wall Street Journal that it had received the complete sum of $117 million for both the Russian sovereign bonds.

It had transferred the amount to Citigroup. JPMorgan is the correspondent bank that links the Central Bank of Russia to Citigroup, which processes payments on behalf of bondholders.

Also read: Sanctions-imposed Russia on brink of historic debt default, first time in century

The West has placed strict sanctions from the war in Ukraine on Russian banks and their financial transactions with Russia. Most of the government's reserves of foreign currency have been frozen.

The Russian government said that the payment had been "fulfilled" in U.S. dollars. In a statement on its official Telegram channel, the government added: "there are no problems with servicing the national debt."

On Wednesday, Russian Finance Minister Anton Siluanov said the government had issued instructions to pay the coupons in dollars. He added that if banks are unable to do that because of sanctions, the payment would be made in rubles.

The Moscow Times reported that international investors have reduced their exposure to Russian government debt since Russia annexed Crimea in 2014.

Currently Moscow owes less than $20 billion in foreign currency to foreign investors, according to calculations by the Institute of International Finance, as reported by Moscow Times.

Also read: Russian exports to reduce by around three million bpd amid war crisis

Inputs from Moscow Times and CNN