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Russia missed a Sunday deadline to pay $100 million in interest on two foreign-currency bonds.
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It has the money to pay, but sanctions are blocking payments from moving through the global system.
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Russia last defaulted on its foreign debt in 1918 during the Bolshevik Revolution.
Russia has defaulted on its foreign debt for the first time in more than a century, as the country can't pay creditors because of sanctions over the war in Ukraine, according to media reports.
The country missed a deadline Sunday to pay $100 million in dollar- and euro-denominated interest on two foreign-currency bonds, The Wall Street Journal reported, citing bondholders. Some Taiwanese holders of Russian bonds also did not receive interest due Sunday, Reuters reported, citing two sources.
Russia said it had sent the money to Euroclear for distribution to investors, the BBC reported. But the payment is held up there, Bloomberg reported. Euroclear would not say whether the distribution had been blocked and said it followed all sanctions, the BBC report said.
In May, the US Treasury ended a key sanctions exemption that allowed Russian sovereign-bond payments to pass through to US investors. In response, Russia said it would start using rubles to pay down dollar-bond payments.
Moscow said it had sent the eurobond payments to the country's National Settlement Depository, Reuters reported last week. But the bonds' covenants do not allow for payments in rubles, which means the payments would still be considered a default.
It's also unclear how bondholders can access the ruble payments, as Russia's National Settlement Depository has been sanctioned by the European Union.
This marks Russia's first default on its foreign debt since 1918, when, during the Bolshevik Revolution, the communist leader Vladimir Lenin repudiated the debt of the czarist era.
But Russia isn't defaulting this time around because it doesn't have the money to pay; its finances are holding up well, thanks to soaring energy prices. Instead, the default comes as sweeping US and European Union sanctions are blocking its bond interest payments from moving through the international payments system.
Up until Sunday, Russia had been making good on its bond payments even amid sweeping sanctions. But markets have been expecting the country to eventually default on its foreign bonds as international trade restrictions intensify.
To counter the situation, President Vladimir Putin signed a decree Wednesday to handle payments on foreign bonds under a new program — which signals that Moscow considers the interest paid, even when payments are made in rubles, Reuters reported. Russia has about $40 billion in outstanding foreign-currency payments.