DUBLIN (Bloomberg) — Ireland's credit rating may be cut by Moody's Investors Service after the government pledged as much as 50 billion euros ($68.6 billion) to save the country's banks.

Ireland's Aa2 rating will "most likely" be cut by one level if a downgrade goes ahead, the company said in a statement yesterday. A downgrade by Moody's, which will finish its review within three months, will bring Ireland's rating into line with Standard & Poor's and Fitch Ratings.

"We're monitoring the banking system, which we now see has led to additional capitalisation needs," Dietmar Hornung, Frankfurt-based Moody's analyst, said in a phone interview, adding the government won't need outside aid. "The focus is on Ireland's ability to recover financial strength." Irish Finance Minister Brian Lenihan said on September 30 the cost of repairing the country's financial system may ultimately rise to about a third of gross domestic product. The country's deteriorating finances have fuelled investor concerns it would become the first government after Greece to tap the 750 billion-euro rescue fund set up by the European Union and International Monetary Fund to stanch the debt crisis.

"On the back of all the banking troubles, the rating agencies are trying to figure out the impact on the public finances," said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf. "There may be some slight underperformance, but we don't expect a massive selloff."

The yield spread between Irish 10-year debt and that of Germany, Europe's benchmark, was at 406 basis points yesterday after widening to a record 449 basis points on September 28. The government last month canceled bond auctions in October and November, saying the state is fully funded through the first half of 2011.

"The liquidity situation is good," Hornung said. " There are no short-term liquidity concerns, so outside help isn't needed."

The finance ministry will publish a four-year plan next month that aims to narrow the deficit to below the European Union limit of 3 percent of gross domestic product by the end of 2014. Ireland's government deficit as a percentage of gross domestic product will likely rise to a record 32 percent this year, Lenihan said.

Standard & Poor's cut Ireland's credit rating one step to AA- on August 24, while Fitch has a AA- rating. Ireland's debt level will peak at 120 percent of gross domestic product in 2014 "if everything goes well," Danske Bank said on September 30.

Ireland has pumped 22.9 billion euros into Anglo Irish Bank Corp. since it seized the lender in January 2009.