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Moody's Investors Service has placed Israel’s debt rating on review for downgrade in view of the country's escalating conflict with Hamas.
Moody’s placed Israel’s A1 long-term foreign-currency and local-currency issuer ratings on review, the agency said in a statement on Thursday. Previously, the credit assessor’s outlook for the nation was stable.
“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,” analysts Kathrin Muehlbronner and Dietmar Hornung wrote.
The military conflict is increasing Israel's already relatively high exposure to geopolitical risks, it said.
During the review period, Moody's will assess whether the conflict is likely to escalate over a longer period or be resolved. "While a short-lived conflict could still have credit impact, the longer lasting and more severe the military conflict, the greater its impact is likely to be on policy effectiveness, public finances and the economy."
The review will also assess whether the conflict will interrupt or reverse the previously expected positive trends in debt metrics.
Earlier this week, Fitch Ratings placed Israel’s credit score on a negative watch on fears of escalation and confrontations with multiple actors, over a sustained period of time.
(Writing by Brinda Darasha; editing by Seban Scaria)
