Credit ratings agency Moody's Investor Service cut its ratings on 15 global banks on Thursday after the market close.

Credit Suisse (NYSE: CS) saw its rating cut by three levels and Morgan Stanley's (NYSE: MS) long-term debt rating was lowered by two notches to Baa1. Other banks that were impacted include JPMorgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS) and Citigroup (NYSE: C) which also saw their rating reduced by two levels. Bank of America (NYSE: BAC) had its rating downgraded by one notch.

The move from Moody's is the first time that the firm has imposed a sweeping downgrade on the banking sector since 2007, ahead of the credit crisis. The move comes after Moody's said in February that it would be reviewing the long-term credit ratings of 17 global banks. In the United States, market fears have been centered on Morgan Stanley, the smallest of the domestic investment banks under review.

Investors had feared that Morgan Stanley could be downgraded by as many as three notches. In after hours trading on Thursday, MS shares are up more than 3%, indicating some market relief over the two notch downgrade. During regular market hours, the stock fell 1.70% amid a broad market sell-off. Prior to today's decision, Morgan Stanley CEO James Gorman said that having his firm's credit rating lowered by three levels would be "a somewhat stunning outcome."

In a statement the company said that "While Moody's revised ratings are better than its initial guidance of up to three notches, we believe the ratings still do not fully reflect the key strategic actions we have taken in recent years." The move could cause Morgan Stanley to pay more to borrow money and force it to cough up billions of dollars in extra collateral.

Prior to being downgraded today, Goldman Sachs CFO David Viniar said that his firm disagrees with the credit agency's approach.

“If you look at every single credit metric there is for Goldman Sachs and frankly for many of our competitors, none of the actions they've talked about are warranted,” Viniar said during an April 17 conference call with analysts and investors.

He added, “We are, as you know, we're quite analytical. And when we do all of the analysis, we cannot figure out why they are where they are.”

In the after hours, Goldman Sachs shares have risen 0.51%.