For the first time since the invasion of Ukraine, a European creditors' association has determined that a Russian company has defaulted.
A bond issued by Russian Railways has been found to have failed to pay, the EMEA Credit Derivatives Determinations Committee, which includes some of the world's largest investment banks, said on Monday.
This is a 250 million Swiss franc loan due in 2026. Bank of America, Goldman Sachs and JPMorgan Chase are some of the committee members seeing a default.
Western sanctions against Russia following the February 24 invasion of Ukraine have put pressure on the local economy.
Since then, it has been puzzling as to whether companies and the state can still meet their payment obligations and whether western lenders are threatened with high write-offs.
The railroad said it was attempting to make the interest payments due March 14.
However, it was unable to do so due to "legal and regulatory obligations within the correspondent bank network", according to a statement published by the SIX Swiss Exchange.
The Kremlin said Russia has the means to pay its debts.
"There can only be a technical, man-made default," Kremlin spokesman Dmitry Peskov told reporters: "There are no objective reasons for such a failure.
Russia has everything it needs to fulfill all of its commitments.”
The United States recently increased economic pressure on Russia because of the invasion of Ukraine.
The Treasury Department last week prevented the Russian government from making more than $600 million in payments due to its creditors from foreign exchange reserves held at US banks.
The reserves held by the Russian central bank were frozen after the war began, but Moscow has so far been able to use them to make payments on government bonds denominated in dollars.
The purpose of the blockade is to force the Kremlin to make a decision: Use the dollars it has access to domestically to either pay its creditors or use it for other purposes, such as financing the war.