Russia defaulted on its external debt, according to the rating agency S&P

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London (CNN Business) --

Credit rating agency S&P Global placed Russia in "selective default" on its foreign debt after the country offered rubles to pay for two dollar-denominated bonds due April 4. .

Russia attempted to pay in rubles for two dollar-denominated bonds due on April 4, S&P said in a note on Friday.

The agency said this amounted to a "selective default" because investors are unlikely to be able to convert the rubles into "dollars equivalent to amounts originally due."

What is selective default?

According to S&P, selective default is declared when an entity has defaulted on a specific obligation, but not all of its debt.

• US blocks Russian debt payments in bid to increase pressure on Moscow

Moscow has a 30-day grace period from April 4 to make principal and interest payments, but S&P said it does not expect it to convert them into dollars given Western sanctions that undermine its "will and technical ability to meet the terms and conditions" of their obligations.

Russia is unable to access some $315 billion of its foreign exchange reserves as a result of Western sanctions imposed after its invasion of Ukraine.

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Last week, the US Treasury blocked Russia's access to its foreign exchange reserves in US banks, forcing Moscow to offer payment of its debts in rubles, diverting foreign exchange earnings that would otherwise be used to shore up their war effort, or not pay at all.

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Until then, the US Treasury had allowed Russia to use part of its frozen assets to pay certain investors in dollars.

Russia denies the default

Kremlin spokesman Dmitry Peskov told a news conference on Wednesday that a default would be "artificial" because Russia has dollars to pay but cannot access due to sanctions.

"There is no reason for a real default," Peskov said.

"Not even close".

Speaking to the pro-Kremlin daily Izvestia on Monday, Russian Finance Minister Anton Siluanov said that Russia will initiate legal action over the matter.

"We are going to sue, because we took all the necessary actions for investors to receive their payments. We will show the court proof of our payments, to confirm our efforts to pay in rubles, just like we did in foreign currency. It will not be an easy process." ".

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