Ratings agency Fitch has made the move on the subordinated debt of Allied Irish Banks (AIB), Bank of Ireland (BoI) and EBS Building Society, cutting the rating to a C, the Irish Times reports.
The organisation noted the action "reflects the Irish government's plans to seek direct contributions to solving the capital issues of the banking system by looking for further significant contributions from subordinated debtholders".
It explained that it was downgrading Irish Life & Permanent because it believed the government is likely to take a majority stake in the bank.
Any future offers by AIB, BoI and EBS for their subordinated debt securities are likely to feature elements of coercion, Fitch observed, noting this was absent from previous tender offers.
Authorities in Ireland recently claimed they are hopeful that its Â£142 billion financial plan will be enough to finally end the country's banking crisis.
By Asim Shah