Moody's downgrades Israel's credit rating to "Baa1" from "A2" and maintains negative outlook.🇮🇱
On September 28, 2024, Moody's Investors Service downgraded Israel's credit rating by two notches from A2 to Baa1, with a negative outlook. This move highlights growing concerns over Israel's economic stability amid escalating geopolitical tensions and internal challenges.
🔹Reasons for the Downgrade
Moody's cited several factors for the downgrade:
1. Ongoing Conflict: The prolonged military engagement in Gaza shows no signs of resolution, leading to regional instability with likely long-term effects.
2. Economic Repercussions: Unlike previous conflicts, this one is expected to cause a more severe and delayed economic recovery.
3. Fiscal Pressures: Slower growth projections and strained public finances may lead to higher borrowing costs and challenges in managing debt.
4. Political Instability: Internal divisions are further compounding external challenges, creating uncertainty for Israel's economic outlook.
🔹Investor Impact
The downgrade signals a shift in Israel's perceived creditworthiness, potentially raising borrowing costs and affecting investor confidence in Israeli assets. The negative outlook suggests the potential for further deterioration if the current issues persist. Earlier in February, Israel was downgraded from A1 to A2, making this a rapid and concerning decline.
