JPMorgan processed Russia bond payments, sent money to Citi

JPMorgan Chase has reportedly processed funds that were earmarked for interest payments due on U.S. dollar bonds issued by Russia and sent the money on to Citi as bondholders waited for a second day to receive the US$117M

JPMorgan Chase & Co. has processed funds that were earmarked for interest payments due on dollar bonds issued by the Russian government and sent the money on to Citigroup Inc. as bondholders waited for a second day to receive the US$117 million, according to people familiar with the matter.

JPMorgan was the correspondent bank Russia used to send the payment to Citigroup, which is acting as payment agent on the bonds, the people said, asking not to be identified discussing a private matter. JPMorgan sent the money to Citigroup after it sought and received the required approvals from U.S. authorities on Wednesday, one of the people said.

Representatives for JPMorgan and Citigroup declined to comment. 

European bondholders of Russia’s sovereign debt had received no sign of the funds as of late Thursday, and S&P Global Ratings warned that the “technical difficulties” in getting the money to investors was increasing the risk of a default -- either this time around or in the future.

Russian officials have said if the payment in dollars is blocked, then it would instead send it in rubles. Russia has a 30-day grace period to meet the payment obligations.

“If funds are not accessible for investors or if a payment is made in a currency not stipulated in the terms of the obligation and we believe that the investor does not agree to the alternative payment, we could deem this a default,” S&P analysts said in a statement, downgrading Russia’s foreign-currency rating to CC from CCC-.