S&P Global has downgraded Israel's long-term credit rating from 'A+' to 'A,' citing risks to the country’s economy and public finances from ongoing military conflicts, particularly those involving Gaza, and potential escalation with Hezbollah, an Iran-backed armed group in Lebanon. The agency raised concerns over security threats, including the possibility of retaliatory attacks, which could deepen the economic impact.
The downgrade follows a recent review by Moody’s, which warned of possible credit rating risks for Israel if tensions with Hezbollah or other regional actors were to evolve into a broader conflict. However, Moody’s current credit rating for Israel is higher than "Baa1," and the warning was about a potential downgrade, not a current one.
Potential Conflict Spillover Cited as Key Risk
S&P Global noted the likelihood of prolonged military activity, stating, “We now consider that military activity in Gaza and an upsurge in fighting across Israel's northern border—including a ground incursion into Lebanon—could persist into 2025, with risks of retaliation against Israel.” The agency emphasized that such developments pose a significant risk to Israel’s fiscal and economic stability.
Despite the downgrade, S&P maintained a "negative" outlook for Israel, reflecting uncertainty over regional security and potential economic strain from prolonged conflicts.
Concerns about Israel’s regional tensions, particularly with Hezbollah and in Gaza, have contributed to investor unease, prompting downgrades and warnings from major credit rating agencies.


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