Today, the Russian government is due to pay $117 million in interest on two dollar-denominated sovereign bonds it sold in 2013. But with the sanctions making it difficult to pay in dollars, Moscow has offered to pay the interest in rubles — a non-starter in international finance.

So what now?

“The thing about defaults is that they are never clear-cut and this is no exception,” said Pictet emerging market portfolio manager Guido Chamorro, as reported by Reuters.

Indeed, the last great sovereign debt crisis in Europe, when Greece nearly defaulted on hundreds of billions of dollars in loans, was fraught with uncertainty until the European Central Bank bailed Greece out with an infusion of cash.

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No such bailout is expected for Russia.

“There is a grace period, so we are not really going to know whether this is a default or not until April 15,” he said referring to the situation if no coupon payment is made. “Anything could happen in the grace period.”

Creditors had not received funds by close of business in London, two sources familiar with the situation said.

Russian Finance Minister Anton Siluanov meanwhile said Moscow had made the payment which had reached the correspondent American bank, and it was now down to Washington to clarify whether settlement is possible.

It’s hard to fathom the devastating impact of the sanctions on Russia.

It had nearly $650 billion of gold and foreign currency reserves, investment-grade credit ratings with S&P Global, Moody’s and Fitch, and was raking in hundreds of millions of dollars a day selling its oil and gas at soaring prices.

Then the tanks rolled and the United States, Europe and their Western allies fired back with unprecedented sanctions that froze two-thirds of Russia’s reserves which it turned out were held overseas.

Russia’s debt obligations will be uncollectible unless the war ends in a few days. That means that future international loans by the Russian government will have a premium attached to them, making them more expensive.

There’s a chance that one of Russia’s giant energy companies, Gazprom and Rosneft, could step in and pay the bonds. In the last few days, they’ve done so. But that couldn’t last forever, and there may be no alternative for Putin but to eat the debt and take the default.

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