Credit ratings agency Standard & Poor’s has downgraded its assessment of Russia’s ability to repay external debt, an indication Moscow will soon default on its foreign loans for the first time since the Bolshevik Revolution.

S&P Global Ratings said on April 9 that it had downgraded Russian foreign debt to “selective default.”

The move came after Moscow arranged to make foreign bond payments in rubles when they were required to pay in U.S. dollars.

S&P said it didn’t expect Russia to be able to convert the rubles into dollars within an allowed 30-day grace period, as further Western sanctions are likely following Moscow’s brutal invasion of Ukraine and amid reports of deadly attacks on civilians.

Western sanctions have hit Russia's economy in a big way, leading S&P and other agencies to downgrade its debt to "junk" status, meaning a default is highly likely.

“Sanctions on Russia 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 debt holders,” the company said.

A selective default rating is when a borrower defaults on a specific payment but makes others on time.

Moscow has indicated it remains willing to pay its debts, but the Kremlin said it would do so in rubles if its foreign currencies held in overseas accounts remain frozen under sanctions.

The Russian Finance Ministry said it attempted to make a $649 million payment on April 4 toward two bonds to a U.S. bank but that the transfer of funds was blocked under U.S. sanctions, so it paid in rubles.

Western sanctions have hit Russia’s economy in a big way, leading S&P and other agencies to downgrade its debt to “junk” status, meaning a default is highly likely.

The Wall Street Journal reported that the S&P action is unlikely to have an immediate impact on Russia or on investors in its bonds. Russian government debt denominated in dollars and euros already trades at a fraction of face value because of the view that Moscow will be unable to pay.

But, the newspaper said, a default would serve as another blow to Russia’s financial system, which worked for years to improve its creditworthiness with foreign investors and was rated investment grade before it launched the war with Ukraine on February 24.

Even in the late 1990s, following the collapse of the Soviet Union, Russia continued to pay foreign debts with the help of international aid. However, it did default on domestic debt.

S&P, Moody’s Investors Service, Fitch Ratings, and other ratings firms are abandoning coverage of Russian debt following the slew of financial sanctions placed on Moscow.