LONDON - Russia said on Thursday it had made debt payments that were due this week but the announcement did not end a wait for what could be Moscow's first default on external borrowing in more than a century as creditors said they had yet to receive the funds.
Russia was due to pay $117 million in coupon payments on Wednesday on two dollar-denominated sovereign bonds, widely seen as the first test of whether Moscow will meet its obligations after Western sanctions were imposed.
It has a 30-day grace period from Wednesday's deadline.
Sanctions imposed over Moscow's invasion of Ukraine have cut Russia off from the global financial system and blocked the bulk of its gold and foreign exchange reserves, while Moscow has in turn imposed countermeasures - all of which complicate payments.
Russia's finance ministry said on Thursday its order to pay the $117 million had been fulfilled and said it would update the market separately on whether the payment was deposited into the account of payment agent Citibank.
Citi's branch in London declined to comment.
But a number of creditors and sources familiar with the situation in Asia and Europe said the funds had yet to be received by holders of the bonds.
The finance ministry had planned to send the equivalent interest payment amount in roubles if dollar payments did not reach foreign bondholders, something credit rating agency Fitch said would constitute a sovereign default, if not corrected within a 30-day grace period.
Generally, a country would pay creditors abroad by sending money to a correspondent bank, which transfers the funds to the paying agent of the security, in this case Citi, before it goes to individual holders' deposit accounts through settlement steps to confirm ownership of assets.
The raft of international sanctions have raised questions about whether such complex and multi-step transactions would run into difficulties, not least because Russia's central bank is among those institutions targeted in Western sanctions.
"The fact is that from the very beginning we have said that Russia has all the necessary funds and potential to prevent a default - there can be no defaults," Kremlin spokesman Dmitry Peskov said in a daily briefing on Thursday.
"Any default that could arise would have an entirely artificial character," Peskov said.
Russia has 15 international bonds with a face value of about $40 billion outstanding, roughly half held by foreign investors.
The coupon payments due on March 16 are the first of several, with another $615 million due over the rest of the month. The first principal payment is due on April 4 when a $2 billion bond matures.
The bonds have a mix of terms and indentures. Bonds sold after Russia faced sanctions for its 2014 annexation of Crimea contain a provision for alternative currency payments. Those listed after 2018 have roubles as an alternative currency option.
A so-called non-payment event could trigger Russian debt default insurance policies known as Credit Default Swaps (CDS) that investors take out for this kind of situation. Investment bank JPMorgan estimates there are roughly $6 billion worth of outstanding CDS that would need to be paid out.
A committee that examines whether or not CDS payouts are due is scheduled to meet later on Thursday. It was not immediately clear what was precisely on the agenda for the committee, which is made up of top banks and funds involved in the CDS market.
The US Office of Foreign Assets Control (OFAC) said on March 2 it had authorized transactions for US persons for "the receipt of interest, dividend, or maturity payments in connection with debt or equity" issued by Russia's finance ministry, central bank or wealth fund, but the exemption runs out on May 25.
Russia is due to pay nearly $2 billion on its external sovereign bonds after that May 25 deadline and until year-end.
(Reporting by Reuters; Writing by Karin Strohecker; Editing by Edmund Blair)