NEW YORK, March 18, 2022 (BSS/AFP) - The possibility of an imminent
Russian debt default appeared to diminish Thursday following statements from
Moscow and news of a payment to JPMorgan Chase, however a ratings agency
warned of a continued risk of nonpayment.

   The Russian government faced a March 16 deadline to pay $117 million in
interest on two dollar-denominated bonds, an obligation that looked
vulnerable following a wave of Western sanctions imposed following Russia's
invasion of Ukraine.

   The finance ministry said in a statement that a payment order worth $117.2
million "was executed" after it was sent to a bank Monday.

   JPMorgan received a payment from the Central Bank of Russia, which the
bank processed after checking with US authorities, a person familiar with the
matter told AFP.

   JPMorgan, a corresponding or intermediary bank, then sent the funds to
Citigroup, the agent in charge of paying bond holders, said the person, who
did not specify the amount received.

   Citigroup and JPMorgan each declined AFP's requests for comment.

   However, S&P Global Ratings later on Thursday downgraded Russia's debt
rating from CCC- to CC, saying "it is our understanding that investors did
not receive the coupon payment" due Wednesday "owing to technical
difficulties related to international sanctions."

   "At this point, we consider that Russia's debt is highly vulnerable to
nonpayment," the ratings agency said, adding that its outlook for the country
was negative.

   Russia was at risk of its first foreign debt default in more than a
century, though there is a 30-day grace period to provide the funds to
creditors.

   Western sanctions have crippled the Russian banking sector and financial
system, and precipitated a collapse of the ruble. The penalties include
efforts to freeze $300 billion of Russia's foreign currency reserves held
abroad.

   A payment in rubles would constitute a default, according to Fitch
Ratings, which warned last week that the possibility was "imminent."

   The US Treasury confirmed that exemptions allowed under the sanctions
imposed by Washington include interest payments on government bonds issued
before March 1.

   Russia last defaulted on foreign currency-held debt in 1918, when
Bolshevik revolution leader Vladimir Lenin refused to recognize the debts of
the deposed tsar's regime.

   The government missed payments on domestic, ruble-denominated debt in 1998
amid a financial crisis.

   - 'Necessary means' -

   But Moscow financial conditions improved dramatically since then, thanks
to some $600 billion in reserves stockpiled, largely from oil and natural gas
sales.

   Russia said Thursday the debt payment was made in a foreign currency,
without specifying which.

   The finance ministry added that it will provide "additional information"
on the crediting of the funds. Russia previously said it had asked an
American bank to process the payments.

   Kremlin spokesman Dmitry Peskov said Russia has "all the necessary means"
to avoid a default.

   "Any default that could arise would be purely artificial in nature,"
Peskov told reporters.

   Moscow's next debt payment of $66 million is due on March 21, according to
a JPMorgan analyst report this month.

   That payment can be made in several currencies, including rubles.