With much of Moscow's $640 billion reserves under lock and key in the West and sanctions crippling cross-border capital flows, investors fear Russia may be heading for its first ever default on sovereign hard-currency debt.

On Wednesday, foreign investors were effectively stuck with their holdings of ruble-denominated bonds — known as OFZs — after the central bank temporarily halted coupon payments and settlement system Euroclear stopped accepting Russian assets.

A ruble debt default has precedent — Moscow reneged on OFZs during its 1998 financial crisis, but even then it kept up dollar bond payments. Before the latest devastating Western sanctions that froze central bank assets, such a Russian default was on no one's radar.