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State-owned company Gazprom has found itself on the verge of a technical default. Citigroup, the Gazprom notes' paying agent, is delaying payments on the securities due to checks for compliance with the sanctions regime, Bloomberg reports, citing noteholders and sources close to the U.S. financial organization.

The agency notes that the company wired the money due last week on time, that is, the solvency of the issuer is beyond doubt. The question is about interest payments amounting to 15 million U.S. dollars and 7.7 million Swiss francs ($8 million). However, the money has not been wired to the accounts of the securities holders so far; both notes have a 14 business day grace period.

According to Bloomberg, all previous interest due on the notes denominated in foreign currencies was paid without any problems since the war began. Moreover, Gazprom has fully repaid one issue of securities worth $1.3 billion. Gazprom is under U.S. and U.K. sanctions; the European Union and Switzerland have not imposed any restrictions on the state-controlled company.

The Russian government experienced similar difficulties earlier, when it was technically unable to transfer interest payments on government bond issues. Foreign authorities, rating agencies and investors interpreted the situation as a default, since formally Russia failed to repay its debts to the holders of securities.

The Russian side insists that it is a reliable issuer, willing to repay its debts, and that the Western sanctions are to blame for the difficulties preventing it from wiring the money to the security holders. To prove its own solvency, the Russian authorities intend to repay the government debt in rubles, but neither the Ministry of Finance nor foreign investors have so far reported their willingness to accept such payments.

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