Belarus, Kyrgyz Republic, Tajikistan, Moldova and Armenia have the most exposure to an escalation in Russia-Ukraine tensions, Moody's report said.

CIS sovereigns could be affected given their economic, financial and energy ties with Russia, as well as their generally weak liquidity and external positions

“The credit profiles of Commonwealth of Independent States (CIS) sovereigns may be affected if tensions between Russia and Ukraine lead to further military conflict and subsequent Western sanctions on Russia,” the authors note.

“Among the region's sovereigns that we rate, Belarus (B3 negative), Kyrgyz Republic (B3 stable), Tajikistan (B3 stable), Moldova (B3 stable) and Armenia (Ba3 stable) are most exposed to an escalation in tensions,” the report says.

“An increase in tensions could impact CIS sovereigns through a number of channels given their economic, financial and energy ties with Russia, though this isn't our baseline scenario,” said Evan Wohlmann, VP-Senior Credit Officer at Moody’s.

An escalation of tensions would likely weaken Russian GDP growth, with a knock-on effect for countries that rely the most on Russia for remittances (Kyrgyz Republic and Tajikistan) and in some cases trade.

If rising tensions cause a marked weakening of the ruble, there could be negative secondary effects on currencies in the region, which could increase liquidity risks, especially for sovereigns such as Belarus, Tajikistan and Georgia.