Moody’s downgrades Israel’s credit rating once again due to increasing geopolitical risks

JERUSALEM, Sept. 27 (Xinhua) — Moody’s Ratings announced on Friday that the Israeli government’s credit rating will be downgraded for the second time in 2024 due to rising geopolitical risks and a weak economic outlook.

The agency reduced Israel’s credit rating by two levels, from A2 to Baa1, with a “negative” outlook. This marks the second downgrade this year, following the first downgrade in February, when the rating was downgraded from A1 to A2.

Analysts at Moody’s stated that the main factor that led to this downgrade was their assessment that geopolitical risks had escalated to very high levels, and that this situation would have significant negative consequences on Israel’s creditworthiness in both the near and long term.

They expressed concern about the possibility of a more permanent weakening of Israel’s economy than previously anticipated due to ongoing military conflicts.

Additionally, analysts noted that the significant increase in geopolitical risk reflects a decline in the quality of Israeli institutions and governance, which has failed to adequately address factors damaging the country’s credit metrics.