Ukraine's hopes of Russia providing $2bn of funding have been scuppered after the country cancelled its planned issue of five-year Eurobonds amid rising political turmoil.
The Ukrainian finance ministry said in a statement that the country faces economic ruin, as billions of dollars of debt funding is needed to stave off bankruptcy.
Standard & Poor's rating agency said it has slashed the Ukraine's sovereign credit rating to triple C, following the deterioration of the political situation and the risk of civil war.
S&P said that it has now cut Ukraine's credit rating to near default levels, as a civil war and a break-up of the country now looks increasingly likely. It had previously downgraded Ukraine on 28 January this year.
S&P added that the rising death toll and escalating violence could hinder Ukraine's prospects of continued Russian support.
"Should Russian financial support fall short of Russia's commitments, we expect the government of Ukraine to default on its foreign-currency obligations," said analysts.
"The negative outlook reflects our view that the Ukrainian government has yet to secure sufficient external funding to avoid a selective default or distressed exchange."
Meanwhile the Ukrainian currency, the hryvnia, has plummeted by its lowest level in five years.
The hryvnia fell 7.5% against the US dollar as of 21 February while Ukraine's 10-year US dollar-denominated bonds, due in 2020, rose by 2.5 percentage points this year.