Standard & Poor's Ratings Services has cut Nokia's corporate credit rating 'BB+' from 'BBB-'. The latest rating is considered highest speculative grade by market participants.
Earlier this week, rating agency Fitch too had slashed Nokia's credit rating.
The downgrades come at a time when Nokia -- once the dominant player in mobile handset space - is battling stiff competition from players such as Apple and Samsung.
S&P also has a negative rating outlook for Nokia, indicating the possibility of a downgrade in the next 12 months, if the company fails to stabilise revenues and margins and significantly cut cash losses.
"The rating action reflects a downward revision of our expectations for revenues from Nokia's Devices and Services division in 2012 and a subsequent revision of our profitability and cash flow assumptions," S&P said in a statement.
Nokia's strong position in this segment could weaken further, especially in China and India, where demand has been significant for low-price smartphone-like devices, a segment where Nokia currently lacks competitiveness, it said.the same extent as in 2011.
"We still expect revenue from Lumia smartphones to grow over time but not sufficiently to offset a rapid decline in revenue from Symbian-based smartphones over the next few quarters," it added.