BOSTON (AP) – Credit rating agency Standard & Poor’s downgraded the rating of Russia ability repay foreign debtsignaling rising prospects that Moscow soon Default on external loans for in first time in more how century.
S&P Global Ratings downgraded its rating to “selective default” late Friday after Russia agreed on foreign bond payments. in rubles on Monday when they should have in dollars. It said it did not expect Russia to be able to convert rubles into dollars during the permitted 30-day grace period.
S&P said in statement that his decision founded in part on believes that sanctions on Russia over This invasion of Ukraine “probably will increase in coming weeks, hindering Russian readiness and technical abilities in honor of terms and conditions of its obligations to foreign debt holders.
A S&P spokesman said that a selective default rating is when a lender defaults on its obligations. on certain payment, but makes others on time.
Although Russia has made it clear that it remains ready to pay its debts, the Kremlin also warned that it would in rubles, if overseas Accounts in foreign currencies remain frozen.
Tougher sanctions introduced on Russia this week after the evidence of alleged war crimes – killing of civilian population in city of Bucha during the Russian military occupation – banned using any currency reserves in US banks for debt payments.
The Russian Treasury Ministry said on Wednesday that it was trying to make a $649 million payment for two bonds of an unnamed US company. bank — previously reported as JPMorgan Chase — but that the tightened sanctions prevented the payment from being accepted, so he paid in rubles.
Western sanctions hit Russia hard. economyas well as S&P and other rating agencies already lowered his debt the status of “undesirable”, considering the default is very likely.
Russia has used strict capital controls, other austerity measures and oil and gas revenues to artificially support up ruble.
Country not default on foreign debt after the Bolshevik revolution in 1917, when the Soviet Union came into being. Even in In the late 1990s, after the collapse of the Soviet Union, Russia was able to continue paying off its foreign debts. with in help of international to help. This was the default on domesticated debtHowever.
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