The United States is actively looking into new sanctions that would force Russia to default on foreign debt, Treasury Secretary Janet Yellen said, The Telegraph reports.

The Office of Foreign Assets Control (OFAC) is considering lifting the exemption allowing Moscow to continue paying its international bonds and avoid a default.

Russia is due to make a few more payments on May 27. However, the temporary exemption granted by OFAC expires two days prior, meaning Russia could default automatically if it is not extended by the US.

Extending the exemption would likely mean that Western bondholders would continue to receive payments and force Russia to continue to deplete its reserves, but a default could have long-term implications for Russia's ability to tap foreign markets for capital.

Yellen said an announcement about the US Treasury Department's plans would be made soon.

The impact will be particularly severe if the reputational damage extends to Russian companies, which are much more dependent on foreign creditors.