Russia faces its first sovereign external default in over a century after it made arrangements to make an international bond repayment in roubles earlier this week, even though the payment was due in U.S. dollars.
S&P on Saturday lowered the country's foreign currency ratings to "selective default" on increased risks that Moscow will not be able and willing to honour its commitments to foreign debt-holders.
Analysts say Russia has the means and ability to pay. The country receives billions in U.S. dollars in revenue from energy exports, and while around half its foreign exchange reserves are frozen, it has hundreds of millions that are not.
Elina Ribakova, deputy chief economist at the Institute of International Finance, said this was likely a "willingness-to-pay situation."
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