Karin Strohecker & Sujata Ro

LONDON, (Reuters) –Russia declared on Thursday that it has made its debt payments which were due next week. However, the announcement didn’t end a long wait for what could have been Moscow’s first default of external borrowing in over a century. The creditors claimed they still hadn’t received the funds.

Russia would pay $117 Million in coupon payments Wednesday on its two sovereign bonds that are dollar-denominated. This was widely regarded as the first step to see if Moscow can meet its obligations following Western sanctions.

You have a period of 30 days from the Wednesday deadline to file your request.

Moscow imposed sanctions on Russia for its invasion of Ukraine. They have also cut Russia out of the international financial system. This has resulted in the loss of large amounts of Russia’s gold and foreign currency reserves. Moscow, however, has imposed countermeasures which can complicate payment.

Russia’s finance ministry stated on Thursday it fulfilled its $117m order and would inform the market about whether or not the payment was made to Citibank.

Citibank’s London branch declined to comment.

Sources familiar with the Asia/European situation and creditors said they had not received funds from the holders of bonds.

According to Fitch, foreign bondholders would not receive dollar payments if the interest payment amount was not received by them. If this happens, credit rating agency Fitch declared that it would result in sovereign default.

In general, countries would send money to correspondent banks to pay their creditors in foreign countries. This transfers the funds to Citi (the paying agent for this security), before they go to individual holders’ deposits through settlement steps that confirm the ownership of assets.

NAVIGATION SANCTIONS

International sanctions raised concerns about complex multi-step transactions. Russia’s central banking is one of those targets in Western sanctions.

Dmitry Peskov, a Kremlin spokesperson said Thursday that Russia is able to stop defaults because it has the resources and the financial capacity.

Peskov declared, “Any default that might arise would be of an entirely artificial nature.”

Russia holds 15 international bonds, approximately half of which are held by foreigners. They have a face worth around $40 billion.

With another $615million due in the remaining months, the March 16 coupon payment is the first of many. After a $2B bond matures on April 4, the first principal payment is due.

These bonds come with a mixture of indentures and terms. All bonds sold after Russia’s 2014 annexation and annexation Crimea were subject to sanctions have a provision that allows alternative currency payments. The rouble is an alternate currency for those listed after 2018.

Non-payment could lead to Russian debt default insurance policies called Credit Default Swaps. Credit Default Swaps are the credit-default swaps that Russian investors use for such situations. JPMorgan, an investment bank (NYSE:), estimates that approximately $6 billion of CDS would be required to be paid.

Later on Thursday, a committee to examine whether CDS payouts have been due will meet. There was no immediate information about the specific agenda of this committee made up top banks and fund managers involved in CDS market.

On March 2, the U.S. Office of Foreign Assets Control stated that it approved transactions to allow Americans for “the receipt of dividends, maturity payments, or interest in connection with debtor equity.” However, the exemption ends on May 25.

After the May 25 deadline, Russia will have to spend nearly $2B on its sovereign debts. This is up until year’s end.