Russia's credit rating looks set to tumble into junk for the first time in more than a decade, a move that would exclude its bonds from a couple of high-profile indexes and may set off another wave of capital outflows.
The Fitch agency cut its rating on Russia to 'BBB minus' from 'BBB' on Friday, citing a significant deterioration in the country's economic outlook due to the slump in oil prices and falling value of the rouble.
That is still investment grade, the category that implies low default risk, but only one notch away from so-called junk, the grade Russia rose out of in 2004.
Bigger rival Standard & Poor's has Russia already at 'BBB minus', with a negative outlook, meaning the next move will likely push it into junk. It says it will review the rating in mid-January and again in April.
"A downgrade to junk for Russia...is a foregone conclusion," said Hung Tran, executive managing director at global industry body, the Institute of International Finance.
A fall to junk will deal a blow both to Russia's already-battered economic prospects and to its image as a global power. Peers in the BRICS group of big world economies - China, India, Brazil and South Africa - are all rated investment grade. Adding in sovereign and corporate debt in roubles and hard currency, Russia has a 0.7 percent weight that Barclays reckons amounts to $140 billion. Dedicated emerging market funds would be less affected because most EM indexes include non-investment grade credits.