The agency attributed this classification to the increasing security risks in light of the latest escalation in the conflict with the Hezbollah group.
The agency also changed its outlook for the Israeli economy to negative, noting that it also reflects the risk of a more direct war with Iran.
She said that the increasing possibility that the conflict between Israel and Hezbollah would prolong and become stronger poses security risks to Israel.
It noted in its report that the downgrade reflects the repercussions on Israel’s economy and public financial conditions as a result of the escalation of the conflict with Hezbollah in Lebanon.
The agency also expected that the current escalation in fighting intensity would support a continued increase in defense-related expenditures.
On September 27, Moody’s lowered Israel’s credit rating to “Baa1” from “A2” and maintained its negative outlook on the rating.
Moody’s said that the main motivation for lowering the credit rating is that geopolitical risks have increased significantly to very high levels, with the resulting material negative consequences on Israel’s creditworthiness in the short and long term.
The credit rating agency stated that Israel’s stated goal of returning its evacuated residents to the north of the country is likely to involve a more intense conflict.
It supported its decision with the marked increase in the intensity of the conflict between Israel and the Lebanese factions in recent days.
It also based its decision on “the decline in the possibilities of concluding a truce in Gaza,” explaining that local political risks have increased alongside geopolitical risks.
Source: Agencies
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2024-10-02 05:21:27
