In a note on Monday, Simon Waever, Morgan Stanley’s global head of emerging-market sovereign credit strategy, warned that Russia’s economy was inching perilously close to default territory, as the West imposes sanctions and talks of a recession mount.

“We see a default as the most likely scenario,” Waever wrote, predicting that the default may occur as early as April 15, a date that will mark the end of a 30-day grace period on coupon payments that the Russian government owes on dollar bonds. The repayments for these bonds will be due in 2023 and 2043.

Waever compared the scale of any potential default to another country that defaulted on its debt contending with Western sanctions: Venezuela. “In case of default, it is unlikely to be like a normal one, with Venezuela instead perhaps the most relevant comparison.” 

As noted by Bloomberg, which previously reported on Waever’s note, Venezuela has been defaulting on its debt since 2019, when state-run oil company PDVSA had accumulated tens of billions of dollars’ worth of late interest payments. Venezuela defaulted on its debt after oil production slowed amid a series of sanctions imposed in 2019 by then-U.S. President Donald Trump in an effort to oust Nicolas Maduro as president.

The U.S. and the EU have placed numerous sanctions on the Russian economy, and severely restricted Russians’ ability to do business outside of their home country, including banning several Russian banks from utilizing SWIFT, an international payments system.

But perhaps the biggest hit to Russia’s economy, and the most reminiscent of Venezuelan sanctions, was the news on Tuesday that the U.S. would ban Russian oil imports and indications that the EU is preparing similar restrictions. 

Russia is the main supplier of crude oil and natural gas to the EU, and the bloc has been working hard to fill the gap of missing Russian energy. On Tuesday, the EU announced several measures that would cut Russian gas imports by two thirds this year, including ramping up imports of natural gas and liquified natural gas from other countries in Europe, Africa, the Middle East, and Central Asia.

Waever notes that Russia and Venezuela are similar in that they both have significant oil assets that are unusable as long as sanctions are in play. Since sanctions have come into effect, Venezuela has been mired in an unending economic crisis, and Maduro has made sanctions relief a key part of his foreign policy stance.

Defaulting on debt can happen either because of an inability or an unwillingness to make payments. Waever notes that it is possible Russia is willingly deciding to delay a payment as a response to Western sanctions, although also admits uncertainty as to whether U.S. banks are allowed to accept coupon payments from Russia under the current sanctions regime.

JPMorgan analysts had previously warned at the beginning of March that sanctions were making an international debt default for Russia likely.

“Sanctions […] have significantly increased the likelihood of a Russia government hard currency bond default,” analysts wrote in a note to clients on March 2.