S&P Further Downgrades Russia's Credit Rating to CC...Mentions 'Default Risk' (Comprehensive)

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[Asia Economy Reporter Kim Hyunjung] International credit rating agency Standard & Poor's (S&P) downgraded Russia's credit rating from CCC- to one notch lower at CC, Bloomberg reported on the 17th (local time). The credit rating outlook remains 'negative.'

The CC credit rating signifies a 'restricted default' status. S&P explained that this downgrade considered the fact that investors did not receive timely interest payments on dollar and euro-denominated bonds due on the 16th, due to technical difficulties arising from international sanctions against Russia.

In its statement, S&P said, "If investors cannot recover funds, or if payments are made in a currency not specified in the debt terms and investors do not agree to alternative payments, we may consider this a default."

Prior to this, following Russia's invasion of Ukraine last month, credit rating agencies raised concerns about a default risk on Russia, subsequently lowering the country's credit ratings significantly one after another.

Brendan McKenna, strategist at Wells Fargo in New York, explained, "This downgrade means Russia is on the brink of a default crisis," adding, "It reflects the weakening of Russia's bond repayment ability."

Earlier, some investors were encouraged by reports that JPMorgan Chase processed funds allocated for interest payments and transferred them to Citigroup, causing Russian bond prices to surge. The U.S. Treasury stated that due to restrictions on transactions with the Russian central bank and other institutions, Russia's dollar debt repayments are not prohibited at least until late May.

S&P stated that if the Russian government fails to make debt payments according to the debt terms or does not make payments within the grace period, it may lower Russia's foreign currency issuer rating to 'selective default.' It also said it is monitoring payments on ruble-denominated bonds. Furthermore, S&P forecasted that Russia may face technical difficulties related to debt repayments going forward.

This content was produced with the assistance of AI translation services.