(Reuters) – Moody’s (NYSE:) on Friday downgraded Israel’s credit standing two notches to “Baa1” from “A2” and maintained a unfavourable outlook amid escalation of the battle within the area with Lebanese armed group Hezbollah.
“The key driver for the downgrade is our view that geopolitical risk has intensified significantly further, to very high levels, with material negative consequences for Israel’s creditworthiness in both the near and longer term,” Moody’s mentioned.
The downgrade stored Israel’s ranking three notches into funding grade. Nonetheless, Moody’s warned that uncertainties over the nation’s safety and its longer-term financial progress prospects “are much higher than is typical at the Baa rating level.” A drop beneath that degree would imply Israel would lose its funding grade ranking.
“The ratings would likely be downgraded further, potentially by multiple notches, if the current heightened tensions with Hezbollah turned into a full-scale conflict,” Moody’s mentioned.
Usually, a lack of funding grade ranking means a spike in the price of servicing debt, and it might pressure some traders to promote their holdings – additional pressuring decrease the market worth of Israel’s bonds.
Score company Fitch downgraded Israel’s credit standing to “A” from “A-plus” final month, and stored the ranking outlook unfavourable.
