Standard & Poor's (S&P) downgraded the debt-ridden country's credit rating from B- to CCC+, with a negative outlook, signaling the country is now vulnerable to default.
Experts consider the country can slip into default this month unless compromise with creditors is reached.
"Without deep economic reform or further relief, we expect Greece's debt and other financial commitments will be unsustainable," the rating agency said in a statement explaining the cut, sending the state deeper into junk territory.
The downgrade "reflects our view that Greece's solvency hinges increasingly on favourable business, financial, and economic conditions," said S&P. The agency also warned that there was a vital deadline looming.
"In our view, these conditions have worsened due to the uncertainty stemming from the prolonged negotiations between the almost three-month-old Greek government and its official creditors."
The ratings agency believed the uncertainty may be to blame for the one-percent contraction of the national economy over the past six months.
The downgrade increases pressure on Prime Minister Alexis Tsipras to negotiate a deal with Greece's international creditors - the European Central Bank, the European Commission and the International Monetary Fund - to extend its financial lifeline.
"In our opinion, economic prospects could deteriorate further unless talks between Greece and its creditors conclude soon," said S&P.
Greece is soon to run out of cash, with analysts considering that the country could default this month if there is no compromise, when it meets with eurozone finance ministers in Riga, Latvia, on April 24.
