Ammon News - Moody's downgraded Israel's credit rating on Friday, citing material political and fiscal risks for the country from its war with Hamas.

The impact of the conflict raises political risk and weakens Israel's executive and legislative institutions, and its fiscal strength for the foreseeable future, said Moody's, which had begun the review for a downgrade on Oct. 19.

The country's rating was cut to "A2," which is five notches above investment grade, while its credit outlook was kept at negative by Moody's, meaning a further downgrade is possible.

"While fighting in Gaza may diminish in intensity or pause, there is currently no agreement to end the hostilities durably and no agreement on a longer-term plan that would fully restore and eventually strengthen security for Israel," Moody's said in a statement.

The agency expects Israel's debt burden to be "materially higher" than projected before the conflict and defense spending to be nearly double the level of 2022 by the end of this year in its baseline scenario.


Reuters