Ratings agency Fitch cut Greece's credit grade Tuesday from "CCC" to "CC" -- highly vulnerable to default -- following the collapse of bailout talks and the Greek government's call for a referendum.
"The breakdown of the negotiations between the Greek government and its creditors has significantly increased the risk that Greece will not be able to honour its debt obligations in the coming months, including bonds held by the private sector," Fitch said.
"We now view a default on government debt held by private creditors as probable."
Fitch noted that polls show more Greeks in favor of the bailout program being put up for a vote on Sunday, despite the Greek government's recommendation to reject it.
Even so, the agency said, "the risk of a 'No' vote is significant. In our view, a 'No' vote would dramatically increase the risk of a Greek exit from the eurozone."
"Such an exit would probably be disorderly as the current government is unlikely to cooperate with the European authorities in such an event."
And even with a "Yes" vote, it said, the country's finances would remain "precarious", especially as it could mean a fall of the government of Prime Minister Alexis Tsipras and a challenge forming a new government.
With pressure building on the country from more looming debt payments, the country will have a hard time keeping up.
Fitch noted that the Greek government's moves have already led to the European Central Bank capping its liquidity financing for Greek banks.
Fitch subsequently cut the ratings for four top banks to "restricted default" on Monday, because the banks were unable to meet all demands from depositors under capital controls.