Standard and Poor’s credit rating downgraded today Russia’s foreign currency bonds in its category «selective bankruptcy(“Selective default”, SD), citing the growing risk that Moscow will not be able or unwilling to continue to meet its obligations to foreign bondholders.
Faced with a barrage of Western sanctions over its invasion of Ukraine, Russia may face its first foreign debt default in a century this year as it settles to pay interest on its securities in rubles this week, although the payment is due in dollars.
S&P explained that it does not expect investors to be able to exchange them rubles in an amount equal to that due to them in dollars or that the Russian government will do it for them “within the 30-day grace period.”
Moreover, the sanctions against her Russia It is expected to expand further in the coming weeks, the house continued, reducing Moscow’s “will and technical ability” to meet “the terms and conditions” for repaying its debts to foreigners held by Russian government bonds.
The Ministry Finance Russia assured this week that Moscow will do everything possible to continue to meet its obligations to its foreign creditors. The bondholders will be in uncharted waters if the Russian government declares a selective or general moratorium on payments.
Russia’s declaration of a moratorium on payments would have been unthinkable before February 24, when what the Kremlin called a “special military operation” in Ukraine began.
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