Moody's cut Russia's credit rating to one step above junk level Friday and warned the country was under review for a further downgrade.
Moody's said that the plunge in oil prices and in the ruble would further erode Russia's economic growth potential and that it had concerns about the government's financial strength.
The grade was cut by one notch to Baa3 from Baa2. Baa3 is the lowest level for "investment grade" sovereign bonds; another cut would take it into "speculative" or junk bond grade.
"The severe -- and likely to be sustained -- oil price shock, alongside Russian borrowers' highly restricted international market access due to ongoing sanctions, is undermining economic fundamentals and increasing financial stresses on both the public and private sectors," Moody's said.
If oil prices stay low through 2016, it said, the recession will persist for more than two years.
Note: Moody's, is the bond credit rating business of Moody's Corporation, representing the company's traditional line of business and its historical name. Moody's Investors Service provides international financial research on bonds issued by commercial and government entities and, with Standard & Poor'sand Fitch Group, is considered one of the Big Three credit rating agencies.