Contra to the black-white answer that the questions asks for (and that one answer provides, contradicting CNN), in international finance, unlike how rating agencies treat your student loan, the grace period does seem to count as being at least in technical default.
Technical default is a situation in which the borrower violated the loan agreement by not making another payment to the debt holder, but physically they can fulfill this agreement and they have the financial resources to pay off the debt.
In practice, a technical default is performed only by those issuers that are really experiencing financial difficulties, because in case of a technical default, the issuer immediately loses its reputation as a stable borrower, the opportunities for further placements are reduced, and potentially future issues will be placed at a higher rate.
After the delay in payment of the bond, a grace period begins (the period within the framework of a technical default), during which the issuer must pay off the debt so that the security does not go into the “default” status. Quite often, a technical default does not end with the bankruptcy of the borrower. After overcoming difficulties during the grace period and paying off their obligations, the issuer can establish work and further prevent violations of obligations.
Likewise:
Default occurs if the issuer failed to fulfill its obligations on the due dates and further within the technical default period (during the grace period). The grace period is specified in the issue documents, but it can also be fixed by law.
And a 3rd time explained
As applied to the bond market, the grace period is the period after the occurrence of a technical default, within which the issuer can pay the amount owed on the coupon, execute the call or repay the principal amount of the debt. If the issuer manages to fulfill its obligations, then the technical default does not go into the default status. However, if prior to the end of the grace period the issuer was unable to make the payment, a default occurs. During the grace period, investors and creditors cannot file claims to initiate bankruptcy procedure for the issuer.
So, given that Russia failed to pay in the previously agreed currency, by the previously agreed date of April 4 (due to US Treasury blocking the transaction) and that Russia tried to pay in rubles instead (by making an internal transaction and asking foreign debt issuers to somehow get their money from Russia, which they can't due to Western sanctions and Russian capital controls combined) there's at least a technical default that took place (on April 4), from my reading of this event according to the quoted definition(s) above.
Amusingly, perhaps, even TASS seems to agree with my interpretation, as last time when Russia was allowed (by the US Treasury) to make such a payment, TASS headlined that "Russia avoids technical default".
Some other texts distinguish between technical default and "actual default" (called just default above) based on intent. Likewise commercial EU regulations define default as a combination of technical default (payment obligation past due) and "unlikeliness to pay".
Whether Russia is not in "actual default" is perhaps more debatable, as that depends on their intent (how) to rectify the situation. Insofar they've announced a lawsuit... which normally doesn't count as payment.
The Securities Industry and Financial Markets Association (SIFMA) uses somewhat different terminology:
Default. The failure of an issuer to make a full Interest, Principal, or payment-inkind
payment when due, or to meet other obligations to the bondholders, such as maintenance of
collateral or compliance with financial or other covenants. An issuer may be said to be in
Default even though any Grace Period has not yet expired. [...]
Event of Default. A Default that continues after the expiration of any Grace
Period. An Event of Default allows bondholders to exercise the remedies specified in the
Indenture, potentially including accelerating the maturity of the bonds, liquidation, rescission or
annulment. [...]
Grace Period. The period of time if any, during which an issuer has the ability to
cure a Default (e.g., make an Interest or Principal payment after missing a Payment Date or
return to compliance with financial ratios) before the failure becomes an Event of Default.
During this period of time, an issuer’s creditors cannot act to force an involuntary bankruptcy
proceeding based on the Default.
It's also worth noting that international credit rating agencies will not be legally able to provide any further rating on Russia, starting on April 15. So this is a somewhat unusual situation in that regard as well, which might have forced them to pre-declare Russia's status as "parthian shot".
According to Reuters, there is one significant aspect to the grace period: ISDA determination committees (for credit default swaps) don't normally meet until the grace period has passed. I tried to confirm that detail from ISDA's beefy internal regs, but I couldn't, so it might be an unwritten rule.
There's also an IMF working paper/chapter (meaning not an official position of the IMF) that gives somewhat more weight to the grace period though:
It is surprisingly hard to define sovereign default. [...]
Contractual Default includes the occurrence of any EoD [Events of Default] or equivalent that also
constitutes default under specified reputable third-party definitions. [...]
At a minimum, it is reasonable to consider missed payments and payment shortfalls that
persist for longer than 30 days (a typical grace period) as contractual default, regardless
of debt form and creditor identity. [...]
Technical Default includes any contractual EoD occurrence or equivalent for domestic
and official debt that does not also constitute default under third-party definitions, such
as those used by rating agencies and in standardized derivatives contracts.
And they have a 3rd def for "Substantive Default" due to Collective Action Clauses (CACs) imposing
haircuts, even though those may not be recognized as defaults under standard legal definitions. But, related to that, they also note that:
Third-party definitions are often pithier than
those found in debt contracts, and focus on economic substance (payoff). Third-party
definitions of default can have major economic consequences, for instance, when they are used
to trigger credit rating downgrades or credit default swap (CDS) payouts. Many economists,
and the most widely used datasets on sovereign default, use rating agencies’ definition of
default (e.g., Reinhart and Rogoff 2009). [...]
As information intermediaries, credit rating agencies have developed distinct methodologies
for evaluating sovereign default, which inform their analysis and ratings. Their criteria focus
overwhelmingly on payoff. They reference underlying credit agreements but are both far more
streamlined and broader than EoD. For example, Moody’s definition of default includes three
kinds of events:
(i) failure to pay interest or principal within the grace period under the debt agreement,
(ii) a distressed debt exchange that reduces the sovereign’s financial obligation to avoid payment default, and
(iii) unilateral change in payment terms “imposed by the sovereign that results in a
diminished financial obligation, such as a forced currency re-denomination … or a
forced change in some other aspect of the original promise, such as indexation or
maturity.” (Moody’s 2018)
Whether point (ii)-(iii) apply to the Russian case is left as exercise to the reader. Moody itself, unlike S&P apparently has made no decision in that regard, yet.
That paper does however also note (agreeing with Reuters on that) that under ISDA definitions though
Failure to pay incorporates any applicable contractual grace periods.
So no ISDA "Credit Event" may be triggered until the grace period expires (according to those sources).
On the other hand an ISDA committee was asked to weigh on the matter of the April 4 event, even though the grace period hasn't expired... (If you wonder about the terminology used there-in: according to somewhat older (1999) ISDA defs that can found on-line, "Potential Failure To Pay" (def 1.12) excludes the grace period whereas "Failure To Pay" (def 4.5) includes the grace period.)
Mini-update: Fox Business has later (April 15) quoted Moody's take:
Russia "therefore may be considered a default under Moody's definition if not cured by 4 May, which is the end of the grace period," Moody's said in a statement on Thursday [April 14].
Somewhat related (and informative as to the time frames we can expect such determinations): on April 11, the state-owned Russian Railways company was judged in default by ISDA's Credit Derivatives Determinations Committee; the company had missed a bond payment on March 14, which had only a ten day grace period.
