Concerns about Belgium's economic growth prospects and its banking system, particularly potential contingent liabilities stemming from a bailout of Dexia bank, also contributed to the decision, Moody's said.
"The fragility of the sovereign debt markets (in the euro zone) is increasingly entrenched and unlikely to be reversed in the near future," Moody's said in a statement.
"It translates into heightened potential for funding stress for euro area countries with high public debt burdens and refinancing needs like Belgium," it added.
Belgium's government declined to comment on Moody's decision.
The ratings agency lowered Belgium's local- and foreign-currency government bond ratings to Aa3 from Aa1. The new rating has a negative outlook, which means another downgrade is possible in a couple of years.
Earlier on Friday, rival Fitch Ratings placed Belgium's AA-plus rating on credit watch negative, signaling a downgrade is possible within three months.
Standard & Poor's, which rates the country at AA, also has the rating on watch negative as part of a broader review of 15 euro zone countries.