Israel’s debt rating was put on review for downgrade at Moody’s Investors Service as the violent conflict with Hamas escalates.
(Bloomberg) — Israel’s debt rating was put on review for downgrade at Moody’s Investors Service as the violent conflict with Hamas escalates.
Moody’s placed Israel’s A1 long-term foreign-currency and local-currency issuer ratings on review, according to a Thursday statement. 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,” wrote analysts Kathrin Muehlbronner and Dietmar Hornung. “However, the severity of the current military conflict raises the possibility of longer lasting and material credit impact.”
The warning follows a similar move by Fitch Ratings, which placed the nation’s credit score on a negative watch earlier this week.
Israel has never been downgraded by any of the major ratings companies, even through conflicts and global economic crises. But its rating was already under pressure before the recent military activity, with credit assessors taking an increasingly dim view of the government’s controversial efforts to weaken the power of the judiciary.
In April, Moody’s lowered the outlook on Israel’s rating to stable from positive, citing a “deterioration of Israel’s governance.”
Israel’s sovereign debt is trading like it’s been cut already as investors factor in the impact of a protracted war. The cost to insure its bonds against potential default has spiked by about 70 basis points since attacks by Hamas.
Israel’s dollar bonds, among the worst performers across emerging markets this week, remained under pressure on Thursday.
(Updates with context and detail throughout)
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