Moody's Investors Services downgraded Ireland's credit rating Friday by five levels along with placing the outlook for the country to Negative. Moody's downgrade comes as speculations hinted that the Irish government would suffer to overhaul the banking sector.

The Irish government's financial strength could decline further if economic growth were to be weaker than currently projected or the cost of stabilizing the banking system turn out to be higher than currently forecast, Moody's said.

The credit rating was downgraded to Baa1 from Aa2, the outlook is negative. Yesterday's GDP report from Ireland showed improvement where the third quarter growth showed an expansion rate on the seasonally adjusted basis of 0.5 percent, compared with the previous -1.2% that got revised to -1.0% while on the yearly scale, the economy contracted by 0.5% compared with the previous contraction of 1.8 percent.