Fitch, Moody’s, S&P downgraded Russia’s sovereign rating to junk, saying Western sanctions threw into doubt its ability to service debt and would weaken the economy.

Russia’s financial markets have been thrown into turmoil by sanctions imposed over its invasion of Ukraine.

FTSE Russell and MSCI decided to remove Russian equities from all their indexes.

Fitch Ratings has downgraded Russia’s long-term foreign currency Issuer Default Rating (IDR) to ‘B’ from ‘BBB’. The ratings have been placed on Rating Watch Negative (RWN).

Fitch said that the severity of international sanctions in response to Russia’s military invasion of Ukraine had heightened macro-financial stability risks, represented a huge shock to Russia’s credit fundamentals and could undermine its willingness to service government debt.

Developments will weaken Russia’s external and public finances, severely constrain its financing flexibility, markedly reduce trend GDP growth, and elevate domestic and geopolitical risk and uncertainty.

“The RWN reflects the high degree of volatility in international relations, including the potential for further sanctions tightening and uncertainty over Russia’s policy response such as not servicing its debt, and the risk of a more acute loss of domestic economic confidence,” the agency said in a report.

It said that the sanctions could also weigh on Russia’s willingness to repay debt. President Putin’s response to put nuclear forces on high alert appears to diminish the prospect of him changing course on Ukraine to the degree required to reverse rapidly tightening sanctions.

“We assume U.S. sanctions prohibiting transactions with the Ministry of Finance will not impede the servicing of Russia’s sovereign debt but this is unclear and the risk of such a severe measure has increased markedly,” Fitch said.

Moody’s Investors Service has downgraded Russia’s long-term issuer (local- and foreign-currency) and senior unsecured (local- and foreign-currency) debt ratings to Ca from B3. The outlook is negative.

The local-currency Other Short-Term rating has remained unchanged at Not Prime (NP).

The downgrade of Russia’s ratings was triggered by Moody’s expectation that capital controls by Russia’s central bank will restrict cross border payments including for debt service on government bonds.

The downgrade to Ca is hence driven by severe concerns around Russia’s willingness and ability to pay its debt obligations. Moody’s view is that the risk of a default occurring has significantly increased, the agency said.

It said that the negative outlook reflected the significant risks to macro-economic stability posed by the imposition of severe and coordinated sanctions and the financial ramifications from delays to sovereign debt repayments and banking and corporate sector stress that are likely to have negative feedback loops for macro stability.

S&P Global downgraded the sovereign rating to “CCC-minus” from “BB-plus” less than a week after dropping it from investment grade.