Russia's finance ministry has said that the coupon payment order on its sovereign eurobonds has been executed, according to a March 17 report by Tass.

Russia was due to pay interest payments on March 16 on two US-dollar-denominated eurobonds, with a 30-day grace period to make the payments in US dollars. Previously  Finance Minister Anton Siluanov confirmed that all the while the FX/gold reserves remain sanctioned, Russia could pay its foreign debt obligations in rubles as per the decree signed by President Vladimir Putin.

Paying foreign currency obligations in rubles would constitute a sovereign default event, the rating agencies have warned. According to the latest report, it seems that the finance ministry executed the payment in foreign currency after all.

"The Ministry of Finance of Russia informs that the payment order concerning the coupon payment on the Russian Federation external bonds with the term of maturity in 2023 in the total amount of $117.2mn sent to the foreign correspondent bank on March 14 2022 was executed," the statement says, as cited by Tass.

The finance ministry added that it will "separately notify" once the funds are credited to the eurobonds payment agent, the London branch of Citibank.

Kommersant daily specified that the payment would be executed under a licence of the US Department of Treasury, which allows investors to receive debt payments on Russian sovereign eurobonds until at least May 25 2022.

According to the Financial Times citing unnamed sources, JPMorgan processed the interest payments from the Russian government after consulting the USDT to make sure it was able to make the payment without contravening US sanctions. JPMorgan is now reportedly set to pass the $117mn in coupon payments to Citigroup.

Russian bonds rallied as investors grew more confident Moscow will continue to service its $38.5bn of foreign debt. The price of a dollar bond maturing in 2043 climbed to 47 cents on the dollar from 38 cents on March 16 and as little as 20 cents a week ago.

As followed by bne IntelliNews, concerns that Russia is being hit harder than it was expecting by sanctions and this will lead to a default were building fast after sanctions on the Central Bank of Russia’s gross international reserves (GIR) on February 27, and the leading state-owned banks' exclusion from SWIFT.