The credit rating agency issued the downgrade to "selective default" late Friday.
Earlier in the week, Russia arranged to make foreign bond payments in rubles when they were due in dollars.
S&P didn’t expect Russia to be able to convert the rubles into dollars within the 30-day grace period allowed.
The downgrade decision was based partly on its opinion that sanctions on Russia over its invasion of Ukraine will likely be further increased.
A selective default rating is when a lender defaults on a specific payment but makes others on time, according to an S&P spokesperson.
The U.S. Treasury blocked a transfer of a $649 million payment to holders of sovereign bonds, keeping Russia from using any of its frozen foreign currency reserves, according to Reuters.
S&P and other ratings agencies had already downgraded Russia's debt to "junk" status, deeming a default highly likely.
The country has not defaulted on foreign debt since the Bolshevik Revolution in 1917, when the Soviet Union emerged.
The Associated Press contributed to this report.