RATINGS agency Fitch said it was making no changes to Ireland's credit ratings but warned that the prospect of a new referendum on the fiscal compact could impact on the country's rating.
Ireland's rating was maintained at BBB+ with outlook negative -- the only country out of six European states under review not to be downgraded.
Italy, Spain and three other euro-area countries were downgraded, with Fitch saying they lack financing flexibility in the face of the regional debt crisis.
The rating agency praised Ireland's progress under the IMF-EU programme and the Government's ability to meet financial targets.
The Government should be able to reduce the deficit to 8.5pc of gross domestic product this year thanks to exports and " a sharp improvement of competitiveness", the rating agency added. It welcomed this week's bond swap as "an encouraging sign".
Still, Fitch warned there were "significant external headwinds", including the sagging European economy and a possible referendum on the fiscal compact, which is due to be adopted by 26 out of the 27 European Union member states by the end of March.
"In light of the initial Irish 'No' to the EU Treaty in the June 2008 referendum, Fitch finds the probability of another rejection non-negligible. The uncertainty that would be created by another such 'No' vote would put further pressure on the rating," the agency said yesterday.
The possible downgrades of Ireland and five other member states were flagged a month ago, with Fitch citing Europe's failure to find a "comprehensive solution" to the region's crisis.
The biggest economy to see its credit rating cut by Fitch yesterday was Italy, which is the eurozone's third-largest economy. It was cut two levels to A- from A+. The rating on Spain was also lowered two notches, to A from AA-.
Standard & Poor's downgraded nine euro region nations, including France and Austria last week, but also spared Ireland. The fallout in financial markets over S&P's action was muted.
A poll by Reuters this week found that economists hold a mixed view of the way ratings agencies have handled the debt crisis.
A fairly modest majority of economists in a separate poll -- 28 out 49 -- thought ratings agencies still provide effective and independent analysis of credit worthiness.
Credit rating agencies received a barrage of criticism in the aftermath of the global financial crisis, caused in part by the collapse of mortgage-backed assets.
The poll suggested there was a great deal of doubt among economists over whether S&P was right to cut the ratings of the nine eurozone countries.
Only 21 out of 46 economists thought S&P's ratings reflected the situation better than rivals Moody's, which has so far refrained from wholesale downgrades of eurozone sovereign credit ratings.