(QHA) -

Russia’s credit rating was cut to below investment grade by Moody’s Investors Service, which joined Standard & Poor’s in ranking the country’s debt as junk, citing the conflict in Ukraine and plunging oil prices.

The rating company downgraded Russia one step to Ba1, the highest non-investment level and in line with countries including Hungary and Portugal. Moody’s has a negative rating outlook on the country, according to a report released Friday. Standard & Poor’s decision cut the country to speculative grade in January.

“The existing and potential future international sanctions, the erosion of the country’s foreign exchange buffers and persistently lower oil prices plus high and rising inflation will take a negative toll on incomes as well as business and consumer confidence,” Moody’s said in the report. “While the fall in the oil price and the exchange rate have reversed somewhat since the start of the year, the impact on inflation, confidence and growth is likely to be sustained.”

The world’s biggest energy exporter is on the brink of a recession after crude fell to the lowest since 2009 and the U.S. and its allies imposed sanctions following President Vladimir Putin’s joining of Crimea to Russia in March. The penalties have locked Russian corporate borrowers out of international debt markets and curbed investor appetite for the ruble, stocks and bonds.