S&P downgrade: Russia headed for default

S&P downgrade indicates Russia headed for historic default

The credit ratings agency Standard & Poor’s has downgraded its assessment of Russia’s ability to repay foreign debt, signaling rising prospects that Moscow will soon default on external loans for the first time in more than a century.

S&P Global Ratings issued the downgrade to “selective default” late Friday after Russia arranged to make foreign bond payments in rubles on Monday when they were due in dollars. It said it didn’t expect Russia to be able to convert the rubles into dollars within the 30-day grace period allowed.

S&P said in a statement that its decision was based partly on its opinion that sanctions on Russia over its invasion of Ukraine “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.”


This effectively locks up the Russian central bank internally in Russia. The reason is there is zero real value to the Russian ruble or the Russian economy. No matter how the central bank raises or lower rates or prints money, the Russian people have nada.

To pay the military becomes extremely problematic. Printing paper is the only contemporaneous way. The mercenaries will stop participating in this war. The Chechnyan warlord will buck doing anything for Putin. The average conscript may not have any food never mind wiping his bum with rubles.

We do not know for sure yet, but bartering might turn very violent particularly in Russia. Theft and vandalism will rise. Riots in the cities may follow as people starve.

I guess Putin made a choice to be executed. Good choice.