JPMorgan processed Russia bond payments, sent money to Citigroup

JPMorgan Chase 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, according to people familiar with the matter.

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., 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. 

While European bondholders of Russia’s sovereign debt have received no sign of the funds, the move spurred optimism that the bonds may be settled, sending prices higher across maturities. The implied probability of a default by Russia within the year inched lower to 57 per cent, down from 59 per cent, according to credit default swap pricing. Last week it was as high as 80 per cent.

“This seems to take a technical default off the table for now,” Kaan Nazli, a money manager at Neuberger Berman in The Hague, Netherlands. “However, there is still some uncertainty over corporate debt as only a number of companies have been given leeway.”