Russia could be defaulting for the first time since 1998

Payment on Russian government dollar bonds with coupons due on Wednesday had not been posted by close of business in London, according to two sources familiar with the situation. 

This could lead to the sanctions-racked country defaulting for the first time since 1998.

Moscow was due to make $117m (£89.4m) interest payments, or coupons, to investors holding two bonds denominated in dollars. But with much of its foreign exchange reserves frozen by international sanctions, it may be unable to pay.

There is a 30-day grace period, but this could be paving the way to a historic default that would add to the intense pressure on the Russian economy.

However, on the flip side, as the sanctions dig in, there could be a compromise on the horizon between Ukraine and Russia and for that, markets are risk on. The MSCI world equity index rose 0.87%, moving away from the one-year lows hit in the previous session. On Wall Street, the S&P 500 is u over 1%, the Nasdaq Composite higher by 1.5% and the DJI is higher by 0.7%.

Russia's foreign minister Sergei Lavrov also said some formulations of agreements with Ukraine were close to being agreed upon. Moscow said the sides were discussing status for Ukraine similar to that of Austria or Sweeden, meaning being members of the European Union but staying neutral and outside the NATO military alliance.