Russia is looking to use a system to pay its debt obligations through one similar to what it has set up for gas payments as a deadline looms for Moscow to avoid a historic default on its Eurobond obligations amid international sanctions imposed over its invasion of Ukraine.
Finance Minister Anton Siluanov told the newspaper Vedomosti on May 30 that the system would work by having creditors set up ruble and foreign-currency accounts in Russia, where the government would then make the payments and exchange them.
The system would allow Russia to bypass Western sanctions -- enacted since Russia's unprovoked invasion of Ukraine in late February -- that restrict access its the international financial sector by using the local National Settlement Depository instead.
"As happens with paying for gas in rubles: we are credited with foreign currency, it is exchanged here for rubles on behalf of [the gas buyer], and the payment takes place," Siluanov said.
"The Eurobond settlement mechanism will operate in the same manner, only in the other direction," he added, meaning the payments would be made by the government in rubles, then exchanged and placed in a foreign-currency account within Russia, where the beneficiary could then access the money.
Holders of Russian Eurobonds are awaiting two coupon payments in dollars and euros. The payments were due last week but there is a 30-day grace period for Russia to execute the transaction, meaning the real deadline will come in late June.
Spokesman Dmitry Peskov said on May 30 that the Kremlin approved of the plan.
It was not immediately clear whether the plan would be feasible and whether all investors would accept such a mechanism. U.S. investors are barred under the sanctions imposed by Washington from accessing the cash from Russian bond payments.
President Vladimir Putin launched the gas-payment system from April 1 to convert payments for Russian gas supplies to countries that Moscow considers "unfriendly."
Some countries, such as Bulgaria, Poland, and Finland, refused to pay for gas under the proposed scheme, after which gas supplies to these countries were halted.