Russia Pays Dollar-Denominated Debt in Rubles

Russia Pays Dollar-Denominated Debt in Rubles

Russia said Wednesday it had made foreign debt payments on dollar-denominated bonds in rubles, in a new blow to efforts to avoid a sovereign default amid Western sanctions over the conflict in Ukraine.

The finance ministry said in a statement that it had been forced to repay $649.2 million to foreign debt-holders in rubles after a correspondent bank refused to execute payment instructions.

“A foreign correspondent bank refused to execute instructions for the payment” of debt on two bonds on April 4, it said.

“In order to fulfill the state debt obligations of the Russian Federation,” the finance ministry “was forced to attract a Russian financial institution to make the necessary payments.”

Russia had avoided default on its foreign currency government bonds by paying the debt in dollars with the approval of the US government. But amid growing calls for President Vladimir Putin to face a “war crime trial,” the US tightened its sanctions.

On Monday, its Treasury Department said it had blocked Russia from making debt payments using dollars held in American banks.

Last week, Russia bought back in rubles three-quarters of the bond that matured on Monday, which was worth about $2 billion.

But it said $552 million, plus the final interest payment, still needed