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. Last Updated: 07/27/2016

S&P Says It May Downgrade Russia

Russia's sovereign-debt rating may be cut or the outlook changed should an investigation into shareholders of Yukos lead investors to sell Russian assets, hurting the economy, Standard & Poor's said.

"If the Yukos affair leads to a significant outflow of capital and ensuing deterioration in economic activity, then we would consider an outlook change or a downgrade," S&P analyst Helena Hessel said in a statement. "At this point," S&P does not expect investment to be affected.

Russian Eurobonds fell after Khodorkovsky's arrest. The decline erased gains that last month pushed the bond to a three-month high after Moody's raised the country's debt rating by two levels to investment grade.

"The neutral observer might come to the conclusion that this is all part of a ratings war," said Timothy Ash, chief economist at Bear Stearns in London.

(Bloomberg, MT)