Russia has made a US$102 million interest payment as the world’s biggest energy exporter continues to service its foreign bonds despite financial isolation after the invasion of Ukraine. 

The Finance Ministry said it transferred the funds to the National Settlement Depository in Russia, from where the coupon payment on the bonds maturing in 2035 is due to be distributed to investors. Capital controls and restrictions on the NSD’s accounts with the world’s biggest settlement systems have complicated and delayed the arrival of funds on previous payments.  

Despite warnings from credit-rating agencies, the government has so far sidestepped a default since the war started and the sanctions were imposed. By transferring the cash, the Finance Ministry has performed its obligations under the bond terms “in full,” it said in a statement Tuesday.

On Monday the Ministry filed notifications for an “interest payment” and “principal repayment” on US$2 billion of dollar-denominated debt due on April 4, the biggest security maturing since Russia was hit with sanctions following its invasion of Ukraine. It also filed a notification for a coupon on bonds due in April 2042. 

The National Settlement Depository, or NSD, in Moscow receives the Russian government’s payments on some of its foreign bonds for distribution. 

CLEARSTREAM HURDLE

While Russia has continued to meet its debt obligations, several hurdles await. The latest came at the end of last week when Clearstream, the Luxembourg-based bank that settles payments for some of the nation’s bonds, blocked the NSD’s account. 

A decision to restart would be based on a review by regulators in Luxembourg, the depository said on March 24. A Clearstream spokeswoman declined to comment at the time of the announcement. 

Among Russian companies, steelmaker Severstal PJSC last week became the first Russian company to run out of time to pay interest on foreign-currency debt since the war in Ukraine began after Citigroup Inc. blocked the transaction.