Moody’s Downgrades Israel’s Credit Rating Due to High ‘Geopolitical Risk’

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Ratings agency Moody’s downgraded Israel’s credit rating on Friday, citing increased geopolitical risks as the conflict with Hezbollah worsens and the possibility of a ceasefire in Gaza diminishes.

“The main reason for the downgrade is our view that geopolitical risk has intensified significantly and reached very high levels,” Moody’s said in a statement.

This comes as Israel’s rating moved down two notches from A2 to Baa1, marking its second downgrade this year.

Fitch and S&P Global Ratings also downgraded Israel this year.

Moody’s noted that the risks “have material adverse consequences for Israel’s credibility in both the near and long term.”

Israel this week shifted its focus from the war in Gaza to Lebanon; struck Hezbollah strongholds across the country, killing hundreds of people.

A day after its Palestinian ally Hamas launched an unprecedented attack on Israel on October 7, Hezbollah began clashing with Israeli soldiers on the Lebanese border.

“Over the longer term, we think the Israeli economy will weaken more permanently than previously expected due to the military conflict,” Moody’s said in a statement on Friday. he said.

He noted that the intensity of the conflict between Israel and Hezbollah “has increased significantly in recent weeks and there is a possibility of a more serious escalation.”

“At the same time, the possibility of a ceasefire in Gaza has diminished,” Moody’s added.

The agency also said there was “no visibility into a military deconflict exit strategy that would restore the level of certainty and security on which the economy and business investment ultimately depend.”

written by/acb