Moody’s, the ratings agency, has cut the Republic of Ireland’s debt rating to junk status and warned of further downgrades.
The U.S.-based international firm cited a “growing possibility” that Ireland will need another bailout when a current support program from the European Union and the International Monetary Fund ends in late 2013, Agence France-Presse reports.
"The outlook on the ratings remains negative," Moody’s said.
The agency's move comes at a time of growing fears that Greece could default on its debt despite a massive EU-IMF rescue plan.
(More from GlobalPost: Greece's debt crisis is not over yet)
It also comes amid concerns that the debt crisis in the eurozone could spread to Italy and Spain, the BBC says.
Moody's said that Ireland "has shown a strong commitment to fiscal consolidation and has, to date, delivered on its program objectives,” AFP reports.
But it also said "that implementation risks remain significant," particularly due to continued weakness in the Irish economy.
Moody’s reduced Ireland's bonds by one notch, from Baa3 to Ba1.
Eurozone finance ministers have been locked in talks in recent weeks over a second bailout package for Greece, AFP says. Much of the debate centered on whether private holders of Greek debt should be forced to take a loss on the bonds.