Plummeting oil prices were one of two factors in the decision by ratings agency Standard & Poor’s to downgrade Russia’s sovereign debt to junk bond status for the first time in a decade.
“The downgrade cut Russia’s credit rating by only one notch,” the New York Times reports this week. “But that was enough to push the government’s debt into the category of junk bonds.”
The S&P announcement, triggered by the falling value of the ruble, “could ripple widely through Russia’s economy,” Kramer writes. “It will force many bond funds permitted to own only investment-grade securities to sell Russian debt.”