Moody's late on Thursday cut Slovenia's government bond rating to Baa2 from A2, just two notches above junk, on worries about the country's banking system and rising vulnerability to shocks.
"We are disappointed that the agency did not take into account the measures the government has passed in the last few months in the area of consolidating public finances," the finance ministry said in a statement.
Slovenia dissociates its problems from those of Spain, Italy or Greece
The statement said the government "deeply regrets Moody's decision because Slovenia's macroeconomic indicators, including deficit and public debt, cannot be compared to Spain, Italy or Greece". "Likewise, the problems in the banking sector are not as serious as in Spain."
The rating agency statement on Thursday said the negative outlook reflected Moody's view that the sovereign's funding challenges and risks from the financial system remain substantial.
"The deteriorating macroeconomic environment amplifies this risk and opens the possibility that external assistance may be required," Moody's added.
Slovenia's budget deficit soared to 6.4% of GDP in 2011 from zero in 2007, as its economy reversed a decade of strong growth, but the centre-right government of Prime Minister Janez Jansa hopes to cut it to 3.6% this year.
Its mostly state-owned banks are likely to end 2012 with a loss for a fourth straight year, after a combined loss of €200 million euros in 2011, largely due to rising bad loans.
Prime Minister Jansa denies Slovenia needs outside help
Last month, the government's macroeconomic institute said local banks' bad loans had reached €6 billion in the first quarter and were likely to rise further.
In its Thursday statement, Moody's said the banking system was likely to face increases in non-performing loans on its books.
Standard & Poor's rates Slovenia A-plus, and Fitch rates the country A. Both those ratings carry negative outlooks.
Jansa's government has strongly denied market rumours that Slovenia could become the sixth eurozone country to ask for outside help because of its troubled banks.
Meanwhile Spain inched closer to seeking a sovereign bailout on Friday as Prime Minister Mariano Rajoy opened the door to a request, although he said he needed first to know the attached conditions as well as the form the rescue would take.
Spain mulls request
At a news conference on Friday, the first he has attended after the weekly cabinet meeting since he took power in December, Rajoy said no decision could be taken until further details are agreed. But he said he was ready to do what is best for the country.
He went further than yesterday, when Rajoy three times declined to say whether he would seek aid and trigger a concerted action of the European Central Bank and the European Union rescue funds to bring down Spain's borrowing costs.
"I will do, as I always do, what I believe to be in the best interest of the Spanish people," Rajoy said on Friday.
"We still don't know what these measures are," he said, with reference to a comment by European Central Bank president Mario Draghi that the bank was examining non-conventional measures to defend the euro.
"What I want to know is what these measures are, what they mean and whether they are appropriate and, in light of the circumstances, we will make a decision, but I have still not taken any decision," he said.