Clock ticks toward Russia default after S&P downgrade
The credit ratings agency issued the downgrade to "selective default" late Friday
Former Bush 43 Assistant Secretary of State Robert Charles argues economic sanctions against Russia could have consequences for the rest of Europe.
Standard & Poor's issued a downgrade of Russia's foreign currency rating increasing the prospect of defaulting on external loans for the first time in more than a century.
The credit rating agency issued the downgrade to "selective default" late Friday.
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Earlier in the week, Russia arranged to make foreign bond payments in rubles when they were due in dollars.
S&P didn’t expect Russia to be able to convert the rubles into dollars within the 30-day grace period allowed.
Russian President Vladimir Putin (Mikhail Klimentyev, Sputnik, Kremlin Pool Photo via AP) (AP / AP Images)
The downgrade decision was based partly on its opinion that sanctions on Russia over its invasion of Ukraine will likely be further increased.
A selective default rating is when a lender defaults on a specific payment but makes others on time, according to an S&P spokesperson.
S&P CUTS RUSSIA'S RATING TO JUNK, MOODY'S ISSUES JUNK WARNING
The U.S. Treasury blocked a transfer of a $649 million payment to holders of sovereign bonds, keeping Russia from using any of its frozen foreign currency reserves, according to Reuters.
A picture shows the Vodovzvodnaya Tower of the Kremlin (L) and the Ministry of Foreign Affairs of Russia's building. (Photo by NATALIA KOLESNIKOVA/AFP via Getty Images) ((Photo by NATALIA KOLESNIKOVA/AFP via Getty Images) / Getty Images)
S&P and other ratings agencies had already downgraded Russia's debt to "junk" status, deeming a default highly likely.
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The country has not defaulted on foreign debt since the Bolshevik Revolution in 1917, when the Soviet Union emerged.
The Associated Press contributed to this report.