Russia has made coupon payments in full on two outstanding Eurobonds due on May 26, the country’s Finance Ministry said on Friday. The early disbursements come ahead of a potential US block on Russian debt payments.
“The Ministry of Finance informs that the funds for the payment of external bond loans of the Russian Federation maturing in 2026 in the amount of $71.25 million and in 2036 in the amount of €26.5 million ($28 million) were received by the paying agent for Eurobonds, the National Settlement Depository,” the ministry said in a statement.
According to the ministry, as of April 1, 2022, Russia’s external public debt amounted to $57.143 billion, including debt on Eurobonds ($37.26 billion). In total, Russia has 15 outstanding Eurobonds with maturities ranging from 2022 to 2047.
The National Settlement Depository has received the funds, the ministry said. However, it is unclear whether the depository would be able to channel the funds further so that they reach Russia’s creditors.
In response to the sanctions placed on Russia in connection with its military operation in Ukraine, Russian President Vladimir Putin in March allowed the payment of foreign currency debts in rubles. However, Western analysts claimed this would be a breach of covenants.
Russia has been given the ability to pay off its dollar-denominated debt thanks a waiver provided by Washington. However, US Treasury Secretary Janet Yellen this week announced that the waiver, which expires on May 25, may be allowed to expire, although no final decision on the matter has been reached. If the waiver expires, Russia will lose the ability to make coupon payments to US investors on its dollar bonds, which would constitute a default, albeit a technical one.
Russia has been eager to avoid default, which is seen as risking reputational damage. Russia’s Finance Minister Anton Siluanov repeated earlier this week that Russia has enough money to service its Eurobonds and would make payments in rubles if Washington blocks other options.
After May 25, Russia will still have nearly $2 billion worth of external bond payments due before the end of the year.
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