S&P has lowered Russia's rating to 'CC' from 'CCC', as the country reported difficulties meeting debt payments due on its dollar-denominated 2023 and 2043 Eurobonds.
The downgrade comes as Russia narrowly avoided defaulting on a $117 billion interest payment that was due on its government bonds earlier this week.
Russia's payment problems stem from international sanctions over Moscow's invasion of Ukraine, the ratings agency said. The sanctions have reduced the country's available foreign exchange reserves and restricted its access to the global financial system.
Fellow rating agencies Fitch and Moody's have also cited concerns about Russia's ability to meet its debt obligations when cutting the country's rating by several notches earlier this month.
Fitch said Russia's ratings would be further lowered to “restricted default” if the coupon payments are not made in U.S. dollars, in line with the original terms, by the end of a 30-day grace period.
Russian bonds are hovering at deeply distressed levels in very illiquid trading, with most issues trading less than a handful of times a day, according to Refinitiv data.
After the sanctions exemption deadline and until year-end, Russia is due to pay nearly $2 billion more on its external sovereign bonds.
Some creditors have received payment, in dollars, of Russian bond coupons which fell due this week. Some other creditors said they are yet to receive their funds.
