Moody’s to review Israel rating

International credit rating agency Moody’s Investors Service has announced that it has placed the Government of Israel’s A1 long-term foreign-currency and local-currency issuer ratings on review for downgrade. Previously, the outlook was stable. Moody’s will monitor closely the consequences of the war over the next three months or longer, and will decide at the end of the period whether or not to downgrade the rating or the rating outlook.

Moody’s has also placed on review for downgrade Israel’s A1 foreign-currency and local-currency senior unsecured ratings and its (P)A1 foreign-currency senior unsecured shelf and senior unsecured MTN program ratings.

Israel’s backed senior unsecured rating has been affirmed at Aaa. The related issuances benefit from an irrevocable, on-demand guarantee provided by the government of the United States (Aaa stable).

Moody’s was due to publish a rating announcement for Israel last week, during the first days after the Hamas attack on southern Israel, but deferred publication at the last minute because of the uncertainty caused by the outbreak of war.

In its explanation of its latest action, Moody’s said, “The initiation of the review is triggered by the unexpected and violent conflict between Israel and Hamas, in response to a large-scale, multipronged attack by Hamas. The most important consequence is the human cost arising from loss of life. This rating announcement addresses the credit implications of recent events.

“Israel’s credit profile has proven resilient to terrorist attacks and military conflict in the past. However, the severity of the current military conflict raises the possibility of longer lasting and material credit impact. The review will focus on the likely duration and scale of the conflict, and on assessing its implications for Israel’s institutions, in particular the effectiveness of its policymaking, its public finances and the economy. The review period may be longer than the typical three months.”

Moody’s announcement comes shortly after as similar announcement from rating agency Fitch. The third main rating agency, S&P, is due to publish a rating announcement for Israel next month. S&P currently gives Israel the highest rating among the three agencies, and may consider a downgrade of its rating or rating outlook.

Published by Globes, Israel business news – en.globes.co.il – on October 20, 2023.

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