The rating agency has cut long-term ratings on the bank by two notches to Aa3.
It has also lowered its financial strength rating from B to C and has cut the bank’s hybrid instruments by two notches to Aa3.
The move follows a similar ratings downgrade from Fitch last week which cut the lender by one notch to AA-minus.
A statement from Moody’s reads: “The downgrades reflect Moody’s expectation of potentially significant further losses at Barclays as a result of write-downs on credit market exposures as well as an increase in impairments in the UK, which could weaken profitability and capital ratios.
“Although Barclays has not taken any government capital to date, Moody’s considers the systemic importance of the bank and the likelihood of receiving government support in case of need to be high.”
The downgrade comes despite a letter of reassurance sent to shareholders last week by Barclays chairman Marcus Agius and chief executive John Varley.
Shares in the bank leapt 57% on the news that Barclays is predicting a pre-tax profit for 2008 of £5.3bn ahead of their financial statement due on February 9.
The bank says it also has £36bn of committed capital equity and reserves and is forecasting £8bn in gross write-downs.