Russia says paid foreign debt in dollars amid default fears

Russia's finance ministry said Friday it had completed payments on two dollar-denominated bonds amid mounting fears that the sanctions-hit country may be forced to default on its foreign debt.

The ministry said in a statement it had made coupon payments totalling some $650 million on two bonds maturing in 2022 and 2042 "in the currency of issue of the eurobonds - US dollars".

In early April, Moscow had attempted to make payments on these bonds in rubles after the United States barred Russia from making debt payments using dollars held by American banks in the wake of the Ukraine conflict.

In response, ratings agencies downgraded Russia and warned that payments of dollar-denominated debt in local currency would constitute a sovereign default, the country's first in decades.

Moody's Investors Service said that if payment on these bonds was not completed in dollars by the end of the 30-day grace period on May 4, it "may be considered a default".

Earlier on Friday, Russian central bank chief Elvira Nabiullina assured journalists that "there cannot be any talk of default", though she added that there were "difficulties with payments".

Russia missed payments on domestic, ruble-denominated debt in 1998 amid a broader financial crisis, but last defaulted on its foreign currency debt in 1918, when Bolshevik revolution leader Vladimir Lenin refused to recognise the obligations of the deposed tsar's regime.