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S&P Downgrades Russian Debt to Junk Status

Western sanctions, capital flight and depressed oil prices are taking their toll on Russia's economy, leading a major credit rating agency to downgrade the country's sovereign rating to "junk" territory. Ratings agency S&P said Monday it had slashed Russia's debt rating to BB+ from BBB-, adding that the outlook for Russia's economy was darkening. The move not only is a blow to Russia's prestige, it also raises the country's borrowing costs at a time it can ill afford higher outlays.

S&P had warned in late December that it could deprive Russia of its investment-grade credit rating as soon as mid-January, following a rapid deterioration of the country's monetary flexibility and a weakening economy. S&P said in a statement that external and fiscal buffers were likely to deteriorate due to rising external pressure and increased government support to the Russian economy. The downgrade marks the first time in more than 10 years that Russian sovereign debt has been rated below investment grade.

Falling Price of Oil Sends Russia Into Economic Crisis 2:00

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-- Reuters and NBC News Staff