S&P puts Russia in ‘selective default’ on FX payments

S&P puts Russia in ‘selective default’ on FX payments

In a statement, Standard & Poor’s said it had lowered Russia’s rating for foreign currency payments to the selective default – just one notch above the default rating on the agency scale – while the ruble payments rating remained at ‘CC’.

For rating agency analysts, given the current conditions, i.e. sanctions being applied to Russia, it is not believed that “investors will be able to convert ruble payments into dollars equivalent to the amounts originally owed” or that the government will be able to convert these payments within a 30-day grace period. a day.

In the same note, Standard & Poor’s said it believed that sanctions against Russia, due to the invasion of Ukraine, could be strengthened in the coming weeks, “preventing Russia’s will and technical capabilities to respect terms and conditions with foreign creditors.”

A country enters into a state of financial default when it cannot meet its financial obligations to creditors, which can be countries or financial institutions such as the International Monetary Fund or the World Bank, for example.

This Friday, financial rating agency Fitch lowered Russia’s long-term debt rating from “B” to “C”, citing a financial default by the country “imminent.”

Two days earlier, Fitch had already downgraded Russia from “BBB” to “B”, with a negative outlook.