Russia just narrowly avoided a huge default, but investors still think there's a 50/50 chance of it happening in the next 12 months

• Russia's probability of default is lower now at 55% from almost 80% a few weeks ago after it made some bond payments.
• Investors think there is still a 50% probability of the country defaulting in the coming 12 months.
• These payments are just a small part of $2.6 billion payment obligations the country has to make in the coming weeks.

Russia just about saved itself from default after making a few key payments to bond investors in the last couple of weeks.

Investors still believe there is a 50% chance of Russia defaulting in the next 12 months, even if this is down from closer to 80% recently, according to research from MSCI.

Russia made $117 million in bond interest payments on two foreign-currency bonds on March 16. This was a small portion of the $2.6 billion in payments Russia has due in the coming weeks.

Spreads of credit-default swaps (CDS) on Russian sovereign debt, which is the cost of insuring against default, have also narrowed, indicating investors believe there is less likelihood of a default than they did a month ago, MSCI noted.

Trading in Russian debt is still suspended on most exchanges. But reported bond prices are rising, from 25% of par value a few weeks ago to above 40%, some close to maturity over 70%, as of March 21, the index provider said.

"Historically, such developments have indicated market optimism around the issuer's ability to service its debt. The Russian Federation, however, still has some major hurdles to clear," MSCI said.

The largest amount of its unpaid debt obligations is $2 billion in principal on a bond due on 4 April.

There has been significant uncertainty concerning Russia's ability to meet its payment obligations after Western nations effectively cut the country off from the international financial system following the invasion of Ukraine.

All three major credit rating agencies have slashed Russia's credit rating several times, leaving it deep in junk territory, since the invasion on February 24.

"At this point, we consider that Russia's debt is highly vulnerable to nonpayment," S&P Global said in a recent statement.

Tough Western sanctions on Russia in response to its war with Ukraine have cut off Russia's access to the global financial system and restricted access to its foreign reserves, threatening to wreck its economy.