Major credit rating agency downgrades Russia to "selective default"
S&P on Friday lowered its gauge of the Russian government's ability to pay foreign debt, citing increased sanctions imposed over alleged war crimes during the country's invasion of Ukraine.
Why it matters: The downgrade is another sign that the country could soon default on its foreign debt for the first time since the Bolshevik Revolution.
Details: S&P changed Russia's foreign currency issuer credit ratings to "selective default" after Moscow attempted to make a bond payment in rubles on Monday.
- Russian President Vladimir Putin signed a decree in March saying that the country can only pay foreign creditors with rubles, which depreciated significantly when the invasion began but have since somewhat recovered.
- Moscow now has a 30-day grace period to pay debtholders in U.S. dollars.
What they're saying: The credit ratings agency said that sanctions "are likely to be further increased in the coming weeks, hampering Russia's willingness and technical abilities to honor the terms and conditions of its obligations to foreign debtholders," per AP.
The big picture: Since reports of atrocities in Bucha have emerged, the West has imposed new sanctions that prevent Russia from using foreign reserves to pay down debt, per AP.
- Moscow had been using foreign bank accounts to stay current, the Wall Street Journal reports.
- The U.S., its G7 allies and the European Union on Wednesday banned new investment in Russia and sanctioned its largest bank.
Go deeper: What a Russian bond default would mean for the markets