Icra had lowered the Jet Airways' rating after the airline failed to meet loan repayment schedule.
Icra has categorised the airlines' two long-term and two short-term foreign currency loans valuing Rs 7,460 crore to 'D' rating from the earlier BB rating with a stable outlook.
The downgraded long-term loans include a term loan of Rs 2,460 crore and a long-term fund-based loan of Rs 750 crore, which have been revised down to D from BB stable.
The affected short-term instrument includes a fund-based limit of Rs 1,920 crore, and a non-fund based limit of Rs 2,330, both of which have been downgraded to 'D' from 'A4'.
The airline, however, claimed that there is no outstanding default in the repayment of dues to banks and financial institutions as of March 31, 2014.
Last fiscal, the airline, in which Gulf airline Etihad holds 24 per cent stake, had lost Rs 4,129.7 crore, as against Rs 779.8 crore in FY'13.
According to the airline, it has cut debt from around Rs 10,500 crore to around Rs 9,800 crore by July-end. However, the interest outgo still stands at Rs 1,000 crore.
At 1.05 pm, Jet Airways scrip was trading 3.96% down at Rs 235.