Russia seems to have avoided an historic sovereign default Friday, tapping its national reserves and making overdue dollars payments to its international debt obligations.

Earlier Friday, Russia’s Finance Ministry said that it had attempted the dollar payments — a dramatic U-turn after the country had previously sought to make the payments on its dollar-denominated bonds in Russian rubles.

The ministry said it had made a payment of $564.8 million on a 2022 eurobond and a payment of $84.4 million on a 2042 eurobond, according to Reuters, with both in dollars — which was originally stipulated in the debt agreements.

According to reports, the funds were channeled into London’s branch. CitibankIt is not clear if they will reach the intended recipients. These payments had been due in April, and were subject to a 30-day grace period. Official default was on May 4.

Russian bonds rose Friday after the Finance Ministry’s announcement. Close Moscow watchers, such as Timothy Ash, an emerging markets strategist at BlueBay Asset Management were not certain if it could still avoid default.

“CDS committee [credit derivatives determinations committee] already ruled default“So this is really extraordinary… bonds rallying strongly… insane,” he wrote in a flashnote Friday afternoon.

Later Friday, a senior U.S. official stated that Russia hadn’t mobilized any money via the U.S. System and that the payments were made using fresh funds.

The main concern was whether they would use immobilized funds in the U.S., or the money that they used to support the ruble. According to Reuters, it appears that the money came from the pile because there were no authorized transactions involving immobilized U.S. funds.”

A spokesperson for the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, was not immediately available for comment when contacted by CNBC.

Nearly half of Russia’s large foreign currency reserves were frozen after punitive economic restrictions imposed by the international powers. invasion of Ukraine.

Russia paid the 2 sovereign bonds due to maturity in 2022 and 2042, in local currency instead of dollars on April 4.

Moody’s, a ratings agency, stated that this departure from payment terms in relation to original bonds contracts could be considered default if it is not corrected by May 4, the grace period of a month.

The bond contracts do not allow for the repayment of bonds in other currencies than dollars. The 2018 eurobonds allow repayments in rubles. However, the bonds prior to 2018, including the 2022, 2042 and 2042 bonds, either don’t have the alternative currency clause, or permit repayments only in the hard currencies dollar, euro or pound sterling. Analysts from Moody’s stated that.

According to the ratings agency, investors did not receive the promise of foreign currency on the due date.

S&P Global Ratings also downgraded Russia’s foreign debt credit rating to selective default after its April 4 ruble payment.

Following the publication of this article, the attempt was made to pay in rubles. U.S. Treasury Department refused in early April a waiver for Russian paymentsIt granted special permission in March to allow foreign bondholders through the process despite U.S. restrictions.

This move stopped the Kremlin paying its owners of holders of its securities. sovereign debt with the more than $600 million of dollar reserves held with U.S. financial institutions. Russia had to choose between using up its existing dollar reserves more or accepting its first default in foreign debt for more than 100 years.

Although sanctions had been imposed after Russia invaded Ukraine, they had already placed a freeze on the Central Bank of Russia’s foreign currency reserves with U.S banks. However, the Treasury allowed Moscow to access those funds to pay its coupon payments on dollar-denominated debt.

Russia appears to have averted a historic bond defaultAfter speculation it might have tried to pay in rubles, the company paid $117 million in interest on its two sovereign eurobonds in dollars.

Dmitry Peskov, spokesperson for the Kremlin, stated that any default would be “purely artificialBecause Russia has the money to pay its debts, it would not be prevented by Western sanctions.

Moscow would default on Wednesday, its first foreign debt insolvency since 1917 Bolshevik Revolution. This could lead to a long period of litigation.

Anton Siluanov (Russian Finance Minister) told pro-Kremlin Izvestia last month that Russia will pursue legal action against any sanctions-imposed default.