Russia Evades Default as JPMorgan, BNY Mellon Process Funds

(Bloomberg) — JPMorgan Chase & Co. and Bank of New York Mellon Corp. processed a payment transaction from Russia for one of its dollar bonds, allowing the nation to continue sidestepping a default.

Most Read from Bloomberg

JPMorgan acted as a correspondent bank in transactions for Russian debt due in 2030 and processed a payment amounting to nearly $447 million on Thursday, which covers an $87.5 million coupon payment and a $359 million principal payment, according to a person familiar with the matter. It then passed the funds on to paying agent BNY Mellon, said the person, who declined to be named because they aren’t authorized to speak publicly.

Funds to pay the bond coupon and partial principal totaling $392.2 million were received by BNY Mellon, Russia’s finance ministry said in a statement on Thursday.

When asked about BNY Mellon’s role, a spokesperson referred to a March 17 statement from the bank on “tragic events” in Ukraine.

Questions arose over Russia’s ability to service its 2030 debt last week after Clearstream, the Luxembourg-based bank that was listed as the clearinghouse in bond documents, blocked the account for the National Settlement Depository. The NSD receives the Russian government’s payments on some of its foreign bonds for distribution.

Yet Russia has shown it is able and willing to service its foreign debts despite sweeping international sanctions in response to President Vladimir Putin’s invasion of Ukraine. Coupon payments for a separate eurobond maturing in 2035, which were due on Monday this week, reached investor accounts about a day later.

Russia also repaid interest and principal on $2 billion of dollar-denominated bonds due on April 4, with the Finance Ministry offering to buy back some of the debt and pay with rubles.

(Adds details from Russian Finance Ministry statement, BNY Mellon comment in third paragraph. An earlier version of this story published Thursday was corrected to clarify JPMorgan’s role in the transaction in second paragraph.)