"It is unfortunate that we are forced to operate in an environment where routine coupon payment is a noteworthy event," Alex Knaster, chief executive officer of Alfa Bank, said Wednesday.

Bank spokesman Andrei Nasonovsky said the bank had already had discussions with its bondholders. "We have already talked about repayment of principal with our creditors," he said. "We will do our best to repay the principal on time."

At the beginning of July, Bloomberg news service reported Alfa Bank proposed to the bondholders to pay only half of the coupon payment.

Market observers remain skeptical about next year's principal payment, due in July. Bloomberg and weekly Finansovaya Nedelya have reported that Alfa Bank was in talks with bondholders, offering to repay half of its Eurobond obligations in July 2002 and the rest in July 2003.

Alfa Bank's Eurobonds are trading at 60 cents to 64 cents on the dollar, with current yield at about 50 percent and 60 percent yield to maturity.

Banking analysts praised Alfa Bank, saying it remained one of the strongest Russian banks, most of which were wiped out by the August 1998 ruble collapse. "Certainly, worse terms have been proposed by other banks to their creditors," said Margot Jacobs, banking analyst with United Financial Group.

Andrei Ivanov, banking analyst with Troika Dialog, said Alfa Bank most probably would be able to pay the Eurobond back if it gets a strategic investor.

"It could be a large foreign investment bank, because Alfa Bank is one of the leading banks on the market," Ivanov said. "Besides, Alfa Bank could also put up a stake in Tyumen Oil Company as collateral, get a bridge loan and repay the Eurobond."

Nasonovsky said the bank has conducted a conference call with its creditors but refused to disclose details.

After it paid its coupon on Tuesday, Alfa Bank and Vneshtorgbank are the two Russian banks that are still making bond payments. In February, Uneximbank was the first to fail to pay on its Eurobonds. Defaults by Rossiisky Kredit and SBS-Agro followed later.

Last week, Reuters reported that SBS-Agro missed a $25.6-million Eurobond coupon payment, scotching restructuring talks with creditors. SBS-Agro's creditors' committee liquidated itself earlier this year.

On June 26, Vneshtorgbank paid its quarterly coupon on floating-rate notes, which mature in September. The principal amounts to $200 million.

Last October, Alfa Bank was not able to repay in full principal on $77 million in commercial paper. On July 16, the bank signed a restructuring deal with a syndicate of creditors led by Bank of America. Alfa-Bank paid 40 percent immediately and agreed to pay the balance over 3 1/2 years, paying interest at 3.7 percent over LIBOR, or the London interbank rate.

As of July 1 this year Alfa Bank had assets worth 27.6 billion rubles ($1.1 billion) and capital of 4.5 billion ($186 million).