Moody's has cut Greece's sovereign rating to A3 and says further downgrades may be on the cards.
The move was prompted by revisions to Greece's 2009 budget deficit, from 12.7% to 13.6% of gross domestic product.
Moody's says Greece may end up paying a lot more for its borrowing than was initially thought.
Yields on 10 year Greek government bonds are now more than 9% - 5 percentage points higher than Germany.
Officials from the European Union and IMF are in Athens to put the final touches on a $US61 billion rescue package that is yet to be activated.