The downgrade reflects "increasing political instability and the corresponding deterioration of Nicaragua's investment, economic growth, and public finance outlook," it said in a press release.
Meanwhile, Organization of American States (OAS) Secretary-General Luis Almagro has called for snap presidential and parliamentary elections in Nicaragua to end months of unrest.
"We suggest holding early general elections… at least in nine months – to allow for new electoral registration – or in 14 months at the latest," he said at the OAS Permanent Council meeting on Friday.
The protests were sparked by unpopular pension and social security reforms launched by the government of President Daniel Ortega, who has since reversed the move. Attempts by the Church to mediate the crisis have reportedly failed.