Standard & Poor’s (S&P), a global credit rating agency, said on the 8th (local time) that it has downgraded Russia’s long-term national credit rating from CC to SD.
According to Reuters, S&P downgraded Russia’s credit rating from CC, which means imminent default, to SD, which means selective default. However, despite the negative outlook, S&P maintained the rating of Russian ruble-denominated bonds at CC.
Russia is believed to have paid interest and principal in ruble on dollar-denominated euro bonds, S&P said in a statement. It is hard to expect the Russian government to repay interest on bonds in dollars within the 30-day grace period.
In addition, S&P predicted that sanctions against Russia will be strengthened soon, and that “this will hinder Russia’s willingness and technical ability to comply with debt repayment.”
The decision came just three weeks after S&P downgraded Russia’s credit rating from “CCC-” to “CC” on the 17th of last month.
At the time, S&P said, “The debt situation for dollar-denominated Eurobonds, which expires in the next few weeks, may face similar technical difficulties.”
Meanwhile, Russian Finance Minister Anton Siluanov said the day before that he would do everything to ensure that creditors could receive payments amid the country’s crisis of national bankruptcy.
Russia has never defaulted on external debt since the 1917 Bolshevik Revolution, but when it invaded Ukraine last month, the default crisis erupted due to strong Western sanctions and diplomatic discord.
Reuters analyzed that Russia could face a national default for the first time in 100 years due to sanctions on Ukraine’s invasion.
