Russian financial markets saw a muted reaction on Tuesday after ratings agency S&P downgraded the country's sovereign credit rating to 'junk', with the rouble strengthening and Moscow-listed shares broadly steady.
Although the rouble fell sharply on Monday and bond yields rose, analysts said that the immediate implications of the downgrade were limited, as the move was largely priced in and other major agencies still rate Russia above junk.
Bond yields on Russian Eurobonds did edge higher on Tuesday, however, as did the cost of insuring exposure to Russian debt.
At 0925 GMT, the rouble was around 1.6 percent stronger against the dollar at 67.69 (RUBUTSTN=MCX) and gained 1 percent to trade at 76.47 versus the euro (EURRUBTN=MCX).
The rouble had fallen 6 percent on Monday, with around half the loss following S&P's downgrade in the evening.
Russian assets had already fallen sharply before the decision because of renewed fighting in Ukraine and the threat of fresh Western sanctions against Russia.
S&P cut Russia's rating from BBB- to BB+, citing Russia's weakened economic growth prospects, hit by low oil prices and Western sanctions over the Ukraine crisis.
Two other major ratings agencies, Moody's and Fitch, are yet to downgrade Russia to below investment grade.
"If the other agencies also cut Russia to junk status in the coming months, a move that is now also widely anticipated, then we may see some selling pressure from investors prohibited from owning sub-investment grade debt," said Chris Weafer, senior partner at Macro-Advisory consultancy in Moscow.