Standard & Poor’s decided to knock Russia’s credit rating down to “junk” status on Monday, dropping it below investment grade for the first time in almost 11 years, as the country tries deal with both international sanctions and a drastic decrease in crude oil prices.

S&P, which downgraded Russia just 10 months ago, cut the nation’s sovereign credit rating another step to BB+, and announced the action in a statement published on Monday. Of note, the ratings firm maintained that the  outlook for Russia is “negative.”

Not surprisingly, Russian ADRs on the NYSE tumbled along with the ruble after the announcement.

Russia Central Bank policy nightmare

Russian central bankers are striving to stem the most severe currency crisis since 1998. The central bank moved to a free-floating exchange rate ahead of schedule in November and has recently undertaken a $15 billion bank recapitalization plan.

Authorities have also spent tens of billions intervening in the currency markets trying to prop up the ruble, but to little effect. Of note, on December 16th, the Russian central bank increased its key interest rate to 17% from 10.5% in a surprise announcement just before 1 a.m. in Moscow. That barely stemmed the downward momentum of the ruble, and the announcement Monday that S&P had slashed Russia sovereign credit rating to junk sent the ruble down to 65 to the dollar.

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Statement from S&P

“Russia’s monetary-policy flexibility has become more limited and its economic growth prospects have weakened,” S&P noted in a statement. “We also see a heightened risk that external and fiscal buffers will deteriorate due to rising external pressures and increased government support to the economy.”

“We believe that Russia’s financial system is weakening and therefore limiting the central bank of Russia’s ability to transmit monetary policy,” the S&P statement continued. “The central bank faces increasingly difficult monetary policy decisions while also trying to support sustainable GDP growth.”

Response from Russian Finance Minister Siluanov

Russian Finance Minister Anton Siluanov replied in a statement that the rating firm’s decision showed “excessive pessimism.”

“There’s no reason to dramatize the situation,” Siluanov explained. “The decision shouldn’t have a further serious impact on the capital market because market participants already priced in the risks of a downgrade to Russia’s credit rating.”