"The Irish government looks set to borrow over and above our previous projections to fund further bank capital injections into Ireland's troubled banking system," S&P said, according to Bloomberg News.
S&P cut the country's long-term rating to A from AA- and the short-term rating to A-1 from A-1+. The outlook on the rating is negative.
The EU and IMF are working on a rescue package for Ireland worth about 85 billion euros ($113.6 billion), Bloomberg News said. About 35 billion euros of this would go to the banks.
Meanwhile, the country is working on a budget that aims to reduce the deficit to 3% of GDP by the end of 2014, from about 32% this year, including the cost of the banking rescue.