Russia's credit rating was cut to Ca by Moody's on Sunday due to central bank capital controls that are likely to restrict payments on the country's foreign debt and lead to default.
Moody's said it cut Russia's rating because of severe concerns about Russia's ability to pay its debt obligations.
Russia's economy has been plunged into crisis as a result of harsh sanctions imposed by the West which include freezing assets of the central bank held overseas and severing several Russian banks from the SWIFT international payments systems.
The central bank put a temporary halt on payments last week and on Wednesday said it had barred coupon payments for foreign investors holding OFZs. It wasn't clear how long the curbs would be in place.
Russia's central bank said on Sunday that Russia's debts would be paid in roubles at the exchange rate at the time of payment.
If they obtained special permission, the debt could be paid in the currency in which it was issued.
Payments from other countries would be deposited into a special account which would be governed by rules set by the central bank.
After local OFZ holders received coupon payments, the focus has shifted to March 16 when Russia must pay $107 million in coupons across two Eurobonds.
Moody's said that foreign bondholders were likely to only recover part of their investment.
It said that the likely recovery for investors will be in line with the historical average.
Russia was rated at investment-grade levels by Moody's and its peers as recently as March 1. The three have since cut their scores several times.
S&P rates Russia at a negative credit rating, meaning a further downgrade is likely.
Moody's only ratings rung lower than Ca is C, which equates to Selective or Restricted Default under the Fitch and S&P Global classifications.
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