Moody's on Thursday downgraded Japan's SoftBank to a junk grade of Ba1, from Baa3, citing worries over the firm's financial position after it bought struggling U.S. firm Sprint.
The downgrade reflected the view that the debt-financed deal would weaken the Japanese mobile carrier's financial flexibility, Moody's said.
The deal risks forcing SoftBank to spend more to help Sprint with its $16 billion capital expenditure through 2014, it added.
"The ratings assessment assumes the acquisition provides no meaningful financial benefit to SoftBank during at least the first two years of ownership," the ratings agency said in a statement.
Rival agency Standard and Poor's cut SoftBank's credit rating to a status of BB+ earlier this month.
SoftBank closed a $21.6 billion deal last week to gain a controlling stake in Sprint, the number three U.S. mobile carrier.
A separate deal which gives Sprint full control of the wireless broadband provider Clearwire was also completed.
SoftBank had targeted Sprint as a way to gain entry into the lucrative U.S. telecoms market.
The deal was the largest overseas acquisition by a Japanese firm.
The downgrade also reflects the financial support SoftBank may extend to Sprint 's capital investment program over the coming two years in order to upgrade facilities.
Moody's said the deal was likely to produce "limited synergies."
"In light of the enormous investment made, negative pressure on SoftBank's rating could emerge if progress in improving Sprint's financial and operational profile does not emerge," Moody's added.