International rating agency Moody's said it was reviewing Russia and Ukraine's debt ratings for downgrades. This comes after Russia invaded Ukraine in the biggest attack on a European country since World War II.
Russia currently has an investment grade rating or Baa3 from Moody's and could potentially be downgraded to junk status.
On Friday (25/2), Fitch downgraded Ukraine three notches lower to "CCC" from "B". The rating agency pushed Ukraine's credit rating deeper into "junk" territory.
Russia's invasion of Ukraine triggered sanctions from the United States (US) and its European allies against some of Russia's top banks, military exports and several people in President Vladimir Putin's inner circle.
There are "serious concerns" around Russia's ability to manage the disruptive impact of new sanctions on its economy, public finances and financial system," Moody's said.
Ukraine is rated "B3" and Moody's said the extensive conflict could pose a risk to the government's liquidity and external position, given the country's sizeable external maturity in the coming years and its economy's dependence on foreign currency funding.
Russia's central bank boosted its banking sector with billions of additional foreign currency and ruble liquidity and relaxed a number of conditions, while the government separately pledged full-scale support to sanctioned companies.
Both the central bank and the government said that the financial stability of Russia's 300 banking sectors would be further maintained, if additional tools were needed.
Russia's invasion of Ukraine could lead to a spate of credit downgrades, S&P Global said on Friday, warning the global economy, and Europe in particular, was now facing a very different picture than expected this year.
