Ratings agency Fitch again downgraded Russia’s sovereign rating, saying that the decision reflects the view that a default is "imminent" as sanctions and trade restrictions have undermined its willingness to service debt.
Russia’s rating was cut by six notches further into the junk territory from "B" to "C," Fitch said on Tuesday.
The country's financial markets have been thrown into turmoil by Western sanctions after it invaded Ukraine, raising significant concerns over its ability and willingness to service debt.
Like other major ratings agencies, Fitch had already slashed Russia’s rating earlier this month to "junk" status, or the category of countries at risk of not being able to repay their debt.
"The ‘C’ rating reflects Fitch’s view that a sovereign default is imminent," the agency said in a statement, adding its new downgrade came because recent developments had "further undermined Russia’s willingness to service government debt."
The rating firm pointed to a presidential decree, which could potentially force a redenomination of foreign-currency sovereign debt payments into local currency for creditors in specified countries.
"Further ratcheting up of sanctions and proposals that could limit trade in energy increase probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations," the ratings agency said.
On March 16, Russia is due to pay $107 million in coupons across two bonds, though it has a 30-day grace period to make the payments.
The "C" rating in Fitch’s assessment is only one step above default, bringing it in line with the Moody’s current equivalent score of "Ca."
The change comes less than a week after Fitch revoked Russia’s investment-grade status, slashing its rating to "B" from "BBB." Peers Moody’s and S&P had also lowered their sovereign ratings.
On Tuesday, the United States and Britain announced they were cutting off Russian energy imports – the U.S. ban is effective immediately, while London said it would phase out oil imports by the end of the year.
If Russia were to default on a debt payment, it would be the first time since 1998.