Moody's Maintains Israel's Rating at Baa1 and Warns of the Impact of Escalation with Iran

SadaNews - Moody's credit rating agency has affirmed Israel's long-term rating in both local and foreign currencies at "Baa1", warning that direct military conflict with Iran will increase pressure on public finances.

The rating reflects Israel's weakened financial position due to rising geopolitical risks since October 2023.

Moody's expects the debt-to-GDP ratio to approach 75 percent in the medium term due to increased defense spending and weak economic growth.

Moody's stated, "Renewed conflict could also threaten Israel's economic strength through potential physical damage to infrastructure and deteriorating security conditions that could affect investment and economic activity overall."

In May, Standard & Poor's Global affirmed Israel's rating at "A/A-1" but warned that the continuation or intensification of the conflict could harm economic and financial performance.

Last month, Fitch Ratings stated that the ramifications of the conflict between Israel and Iran seem to fall within a range that can be accommodated by the "A"/negative rating level for Israel.

Moody's also maintained its outlook for Israel at "negative".