Moody's also warned of further downgrades as it expressed concern about the bank's plan to revive its fortunes following a £8.24bn loss in 2013.
The ratings agency also warned RBS last month that it was considering downgrading its debt, which functions as a corporate credit rating and determines the interest rate at which businesses can borrow.
Andrea Usai, Moody's vice president, said:
"Over a longer-term horizon, RBS's restructuring plan should be beneficial for creditors if executed according to plan."
"However, the plan is large and complex, carrying significant execution risk in the short to medium term, happening at a time when the bank has limited financial flexibility to manage unforeseen events, which could arise either from the plan or from other sources, such as further litigation or conduct costs."
