Russia says paid foreign dollar debt in rubles amid default fears

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."

The finance ministry did not specify if the ruble payment had been accepted. 

Many analysts say Russia is heading into default but the Kremlin appeared to reject that assertion on Wednesday.

"Russia has all the necessary resources to service its debts," Kremlin spokesman Dmitry Peskov told reporters.