Credit ratings service S&P issued a note on Friday stating that Russia has defaulted on foreign debt, CNN Business reported. S&P said that Russia attempted to pay in rubles for two dollar-denominated bonds that matured on April, and that this attempt  amounted to a "selective default" because investors are unlikely to be able to convert the rubles into "dollars equivalent to the originally due amounts." 

S&P explained that a selective default is declared when an entity has defaulted on a specific obligation but not its entire debt. Russia has a grace period of 30 days from April 4 to make the payments of capital and interest, but S&P said it does not expect that the country will convert them into dollars, given Western sanctions brought in response to Russia’s invasion of Ukraine. S&P said that these sanction undermine Russia’s "willingness and technical abilities to honor the terms and conditions" of its obligations.  

According to CNN, a full foreign currency default would be Russia's first in more than a century, when Bolshevik leader Vladimir Lenin repudiated bonds issued by the tsarist government.  

CNN reported that Russia cannot access roughly $315 billion of its foreign currency reserves as a result of Western sanctions. The United States allowed Russia to use some of its frozen assets to pay back certain investors in dollars, until last week. But the U.S. Treasury has since blocked the country from accessing its reserves at American banks, part of its effort to ramp up pressure on Russian President Vladimir Putin and further diminish his war chest.  

According to JPMorgan, Russia had roughly $40 billion of foreign currency debt at the end of last year, with about half of that held by foreign investors.  

In response, Russia is planning to take legal action, CNN reported.  

"We will sue, because we undertook all necessary action so that investors would receive their payments," Finance Minister Anton Siluanov told pro-Kremlin Izvestia newspaper on Monday.  

"We will show the court proof of our payments, to confirm our efforts to pay in rubles, just as we did in foreign currency. It won't be a simple process," he added. He did not say who Russia planned to sue. 

Kremlin spokesperson Dmitry Peskov said in a press conference last week that any default would be "artificial" because Russia has the dollars to pay—it just can't access them.  

"There are no grounds for a real default," Peskov said. "Not even close." 

Russia has taken steps to artificially prop up the ruble, including raising interest rates to 20 percent and forcing exporters to swap most of their foreign currency revenues for rubles. Last week, Russia  announced that it was cutting interest rates to 17 percent.