The rating agency cut Israel’s credit ratingfor the second time this year, Baa1and put it in a negative perspective, a sign that I could demote her again in the short term.
“The main driver of this downgrade is our view that geopolitical risks have intensified significantly, to very high levels, with negative consequences for Israel’s creditworthiness in the short and long term,” Moody’s explained.
The agency thus lowered the Israeli debt rating by two notches, from A2 to Baa1.
Israel moved the focus of the war in Gaza to Lebanon this week, and began attacking Hezbollah infrastructure in that country, leaving hundreds dead.
A day after Hamas’ unprecedented attack on Israel on October 7, Hezbollah began firing projectiles at Israeli troops on the Lebanese border.
“In the long term, we believe that Israel’s economy will be weakened more lasting than expected due to the military conflict,” Moody’s indicated this Friday.
The agency highlighted that the intensity of the conflict between Israel and Hezbollah has “increased in recent weeks, with the possibility of it escalating further.”
“At the same time, the prospects for a ceasefire in Gaza diminished,” he added.
“There is no vision of an exit strategy from the military conflict that can restore levels of certainty and security, on which the economy and business investment ultimately rest.”
