Financial firms Moody's and Fitch downgraded Russia's sovereign rating to the 'Junk' category, after the West imposed a host of sanctions on the nation, PTI reported.
Both the credit-rating companies cut their assessment of Russia by six notches, to a single-B rating in Fitch's case and to B3 by Moody's.
The two rating firms, which had previously given Russia low investment-grade ratings of BBB and Baa3, respectively, both signalled that further downgrades could follow, Wall Street Journal reported.
The downgrade in rating by the two firms is indicative of Russia's turbulent financial markets, implying that the country is susceptible to high-credit risks.
"The multi-notch downgrade of Russia's ratings and maintaining the review for further downgrade were triggered by the severe sanctions that western countries have imposed on Russia, including the sanctioning of the Central Bank of the Russian Federation (CBR) and some large financial institutions, in response to its military invasion of Ukraine and retaliatory measures taken by the Russian authorities," Moody's said, while explaining the rationale behind the decision.
"The severity of international sanctions in response to Russia's military invasion of Ukraine has heightened macro-financial stability risks, represents a huge shock to Russia's credit fundamentals and could undermine its willingness to service government debt," Fitch said in a statement issued.
The move comes after the West and the other countries, notably Singapore and South Korea, imposed restrictions on Russia, in an attempt to pressurise the nation's financial markets.
Russia was also removed from the SWIFT system of global financial transactions as a consequence.
(With inputs from PTI and Wall Street Journal.)
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