(Adds details of IIF warning, background on sanctions)
WASHINGTON, July 18 (Reuters) - Further sanctions on Russia would have a "broader chilling effect" on the country and its companies that are already largely excluded from raising foreign capital, a lobbying group representing 500 world financial institutions and major banks warned on Friday.
Indeed, further sanctions are likely if an investigation establishes Russian links to the downing of a Malaysian airliner on Thursday, the Washington-based Institute of International Finance said.
Of the four companies sanctioned by the United States on Wednesday, Rosneft Oil Co was most vulnerable due to its hefty financing requirements for the remainder of this year.
The other Russian entities included in the most extensive sanctions yet from Washington were Gazprombank, Novatek, Vnesheconombank, or VEB, and eight arms firms.
Thomson Reuters LPC data shows the four companies have a combined $32.3 billion of syndicated loans outstanding in the next five years, which could be difficult to refinance.
Rosneft is in the market with a $2 billion oil prepayment deal that it is raising with Swiss energy trading company Vitol.
Banks were also due to sign a $1.5-$2.0 billion loan for listed state-backed bank VTB before the new sanctions were announced on Wednesday.
So far, the IIF said, sanctions have been targeted at individuals and companies linked to Russia's annexation of Crimea and to the country's leadership.
However, if investigations establish Russian links to the downing of the airliner, there was a risk that those sanctions could be broadened to include entire sectors, such as energy and finance, in so-called "Level 3" sanctions.
"There are measures that can be taken in the short term, in the long term. There would be a severe problem if those Level 3 sanctions were kept for a long time," IIF Executive Managing Director Hung Tran said during a conference call. (Reporting by David Chance; Editing by Bernadette Baum)