Russia is the gift that just keeps on giving for traders and journalists with Thursday’s big news pertaining to the “R” in BRIC being Standard & Poor’s paring its outlook on Russian sovereign debt to negative from stable.

S&P reaffirmed Russia’s BBB foreign currency rating while saying “”In our view, heightened geopolitical risk and the prospect of U.S. and EU economic sanctions following Russia’s incorporation of Crimea could reduce the flow of potential investment, trigger rising capital outflows, and further weaken Russia’s already deteriorating economic performance,” according to a statement.

News of S&P’s revised outlook on Russian bonds broke after it was revealed oligarch investors and Russian companies have recently been snatching up shares amid some of the lowest valuations in the emerging world. [Seeing Value in Russian Stocks]

Russia often vies with Brazil for the top spot among BRIC nations in terms of heft in emerging markets bond ETFs, meaning S&P’s lower outlook on the former’s debt could affect an array of dollar-denominated and local currency ETFs.

On the local currency front, the actively managed WisdomTree Emerging Markets Local Debt Fund (NYSEArca: ELD) and the passively managed Market Vectors Emerging Markets Local Currency Bond ETF (NYSEArca: EMLC) each have allocations of at least 8% to ruble-denominated bonds. Malaysia is ELD’s largest country at almost 11% while Poland tops EMLC at over 10%. [Some Help for EM Bond ETFs]

The iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEArca: EMB), the largest emerging markets bond ETF by assets, features dollar-denominated Russian debt to the tune of 5.84%, good enough to be the ETF’s third-largest country weight, according to iShares data.

EMB has a 30-day SEC yield of almost 5% with an effective duration of seven years. Over a third of the ETF’s 235 holding are rated BBB or BBB+ by S&P.

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