S&P Assesses Russia at 'Selective Default'

S&P Global Ratings has downgraded its assessment of Russia's ability to repay foreign debt, signaling increased prospects that Moscow will soon default on such loans for the first time in more than a century. The credit ratings agency issued the downgrade to "selective default" Friday night after Russia arranged to make foreign bond payments in rubles last week when they were due in dollars. It said it didn't expect Russia to be able to convert the rubles into dollars within a 30-day grace period, the AP reports. S&P said sanctions on Russia over its invasion of Ukraine are likely to increase, impeding its willingness and ability to honor its obligations to foreign debtholders.

The Kremlin has signaled it's willing to pay its debts but warned it would do so in rubles if its overseas accounts in foreign currencies remain frozen. S&P Global joins Moody's Investors Service and Fitch Ratings in withdrawing all of its ratings on Russia, per Bloomberg. "Although the default could be remedied under a 30-day grace period allowed under the terms and conditions of the bonds, we don't expect that investors will be able to convert those ruble payments into dollars equivalent to the originally due amounts, or that the government will convert those payments within that grace period," S&P said in a statement.

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