© Reuters. The Russian one-ruble coin is seen next to the one-dollar bill in this illustration taken April 5, 2022. REUTERS / Maxim Shemetov / Illustration
MELBOURNE (Reuters) – S&P on Saturday downgraded Russia’s foreign currency rating to “selective default” due to the increased risks that Moscow would not be able and willing to fulfill its commitments to foreign investors. foreign.
Facing a wave of sanctions over its invasion of Ukraine, Russia could face its first sovereign foreign default in more than a century after it implemented a deal to repay international bonds in cash. rubles this week, even though the payment is due in dollars.
In a statement, S&P said it understood that Russia made coupon and principal payments for Eurobonds in rubles on Monday.
“We do not currently expect that investors will be able to convert those ruble payments into the dollar equivalent of the amount originally due, or that the government will convert those payments within a short period of time. 30-day grace period.”
The agency said sanctions against Russia are likely to be further increased in the coming weeks, “hindering Russia’s readiness and technical ability to comply with the terms and conditions of its obligations towards foreigners.”
Russia’s Finance Minister on Thursday said the country will do whatever it takes to pay its creditors, but investors in Russia’s international bonds face an increasingly uncertain path to recoup. theirs if the country defaults..
S&P assigns a selective default rating when it considers that a debtor has selectively defaulted on a particular issue or type of obligation but will continue to meet its payment obligations on such matters. subject or other type of obligation in a timely manner.
Russia has not defaulted on foreign debt since the revolution of 1917, but its bonds have now emerged as a focal point in economic relations with Western countries.
A default was unthinkable until recently, with Russia being assessed as investment class prior to the February 24 invasion of Ukraine, which Moscow called a “special military operation”.