According to U.S Treasury Spokeswomen beginning today, The U.S Treasury will not permit any dollar debt payments made from Russian government accounts to U.S financial institutions. If Russia cannot make due on their sovereign debt obligations, this would constitute a technical default.
Russia, despite sanctions, so far has been able to pay coupons for its $40 billion in international bonds. Wile Russia has the ability to pay their debt, the United States government is forcing a default.
This would be Russia's first default in nearly two and half decades. Foreign defaults usually lead creditors to seize some physical assets from the defaulting country. In the case of Russia, who is already facing historic sanctions, may not have many more physical assets for creditors to seize outside of the country. The fact that they are a huge energy producer for Europe also poses some interesting dynamics. Some countries have self-imposed rules to not conduct trade with countries that have defaulted on their debt. It is unclear if this technical default would change anything for energy-starved Europe in deals for Russian oil/gas.
On the Russian front, their credit ratings would tank from this default and make future borrowing rates sky-rocket (if they have plans on re-entering global capital markets). This also extends to Russian companies. The contagion effect of a technical default is still uncertain.
As we've noted before, The United States forcing sanctions and now a default when Russia is willing to pay may create more reasons for other countries to exit dollar-based assets and liabilities, thus pushing them towards other currencies. Countries looking to diversify their reserves may be wise to stock up on non-sovereign, trust-minimized, censorship-resistant assets.