Fitch ratings agency says it has downgraded Cyprus' sovereign credit grade to junk status, citing a rise in the amount of rescue money needed by its banks, which are heavily exposed to Greece.

The agency lowered the eurozone country's rating by one notch to BB+ from BBB- and kept a negative outlook, which means more downgrades are possible in coming months.

Cyprus is expected to ask for foreign aid to rescue its banks, either from its fellow eurozone nations or from Russia. The banks were big holders of Greek sovereign bonds whose value was written down sharply this year.

In a statement, Fitch says "its estimates of the losses and capital needs of Cypriot banks are subject to considerable uncertainty."