Russia looks to avoid historic default with dollar bond payment ahead of next week's deadline

• Russia's Finance Ministry said Friday that it had sent dollar payments to Citibank for two dollar-denominated bonds.
• Russia had previously sent ruble payments ahead of its April 4 deadline, but those were rejected.

After its ruble payments on two dollar-denominated bonds were blocked earlier this month, Russia's Finance Ministry announced Friday that it sent payments in dollars to Citibank.

The first payment was $564.8 million for a 2022 Eurobond, and the other was a $84.4 million payment on a 2042 bond. Russia had previously attempted to pay in rubles ahead of the April 4 deadline, but they were rejected and the country entered into a 30-day grace period to make the payment in dollars.

Now, if these payments are processed successfully, Russia will meet the deadline of May 4, avoiding a historic default on its foreign-currency debt.

According to the statement, the two foreign bonds are currently processing, though sanctions had held them up for weeks.

Since Vladimir Putin ordered the invasion of Ukraine, Western sanctions have frozen Moscow's foreign currency reserves, and Russia has grown increasingly isolated from global financial markets.

After the rating agency S&P Global downgraded the country's foreign currency payments to a "selective default" earlier in April, Russia's finance minister threatened to take legal action if the nation is forced into a default.

Meanwhile, Russia's five-year default risk has climbed to roughly 88%, ICE Data Services reported. That's up from 24.1% on February 24, when the invasion first began.