11 Apr 2022 10:52

S&P downgrades Russia's foreign currency ratings to 'SD,' withdraws all ratings

LONDON. April 11 (Interfax) - S&P Global Ratings downgraded Russia's long-term and short-term foreign currency ratings to 'SD'(selective default) after the country's Finance Ministry made payments on bond issues maturing in 2022 and 2042 in rubles due to a U.S. ban on using frozen Russian foreign currency reserves to service foreign debt, the rating agency reported in a press release.

Although there is a 30-day grace period to rectify the default under the terms of the bond issues, the agency said it does not expect investors to be able to convert the ruble payments into the initially prescribed dollar equivalent or that the government will convert these payments within the grace period.

The latter assumption is based on S&P's view that sanctions against Russia will be expanded in the coming weeks, which will reduce Russia's desire and technical ability to meet its obligations to international creditors, the agency said.

S&P subsequently withdrew all of Russia's ratings, including local currency ratings, which were at 'CC/C.' This decision followed the European Union's probation against rating actions in regard to Russia and its issuers. The EU on March 15 banned the assignment of ratings to Russia and Russian companies by EU credit rating agencies, as well as on the provision of rating services to Russian clients.