Speculation has been increasing that Russia will default on its debts as economic sanctions by the West and its allies have frozen billions of dollars of the country's foreign currency reserves.

Russia is due to pay 117 million dollars in interest on sovereign bonds on Wednesday and other debts after that. But the country said about 300 billion dollars of its reserves cannot be used due to the sanctions.

Russian President Vladimir Putin earlier this month signed a decree that temporarily allows overseas creditors to be paid in rubles instead of foreign currencies.

But credit rating agencies could see payments in rubles, whose value has sharply plunged, as one-sided changes to terms, and regard it as a default, which will cause investors to incur losses.

Analysts say this will also narrow options for the Russian government and Russian firms for raising money, dealing a blow to Russia's economy.

After the Russian invasion of Ukraine, major rating agencies had lowered the credit rating for Russian government bonds over concerns of a default by Russia.