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Russia seems to have avoided a historic sovereign default on Friday by paying last-minute dollar bonds

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Russia’s finance ministry said on Friday it had tried to pay in dollars – a dramatic turnaround after the country had previously tried to make payments on its dollar-denominated bonds in Russian rubles.

The ministry said it had made a payment of $ 564.8 million for a 2022 euro bond issue and a $ 84.4 million payment for a 2042 euro bond issue, according to Reuters, both in dollars. was originally stipulated in the debt agreements.

It appears that the funds were directed to Citibank’s London subsidiary, but it is unclear whether they will reach their recipients. Payments were due in April and entered a 30-day grace period before the official default on May 4.

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Russian government bonds rose on Friday afternoon following news from the Ministry of Finance. Close observers in Moscow, such as Timothy Ash, an emerging market strategist at BlueBay Asset Management, were unsure whether the country would continue to be able to avoid default.

“The CDS Committee [comitetul de determinare a instrumentelor financiare derivate de credit] it has already decided that it is default, so it is something extraordinary … the bonds have risen sharply … crazy “, he said on Friday afternoon.

Also on Friday, a senior US official said Russia had not mobilized money through the US system and that the payments involved new funds.

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“The main concern was that they would use funds that are immobilized in the US or use the money they used to support the ruble and the war effort. It seems that the money came from a lot of money because we did not authorize any transaction involving fixed assets in the USA “, the official said, according to Reuters.

A spokesman for the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, was not immediately available for comment when contacted by CNBC.

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