so, i am bit confused here. S&P downgrades Russia's sovereign credit rating outlook to 'negative' today. because they committed some 15% of GDP to bailout the financial system and are heavily intervening in the forex market, which dwindled down the reserves by 15 bill just in a week. S&P is worried about the impact on the government balance sheets as confidence in the financial system and monetary regime declines.
so these are all big numbers, I agree. but at the same time, Russia's public external debt is a puny 2-3% of GDP, its forex reserves are 30% of GDP, oil funds another 14%, government budget and CA are all in surplus. so I am not reeeeally worried about its ability to pay back its debts. What is more, Russia is actually lending to other countries, like Iceland and Belarus.
I wouldn't care about S&P ratings, but the potential downgrade raises the costs of insuring the debt against default, with the debt now classified as distressed. Now, if you look at the US, with all its troubles and deficits, the credit ratings is an AAA (stable) against Russia's BBB+ (negative).
is it just me or there is something wrong with the picture?