Global risk rating agency Coface has raised Israel's country risk rating by one grade from A4 to A3, the same rating as Italy, China, and the UK, among others. The upgrade was one of 20 upgrades in the company’s global country risk review.
Coface said that Israel was one of the few countries in the world that was able to improve its risk rating in recent months, during the global credit crisis. Israel's A4 rating of the past two years was the same rating as Mexico, Estonia, and Hungary, among others.
Coface country ratings A1 through A4 are considered ratings that enable countries to get investment and local companies to obtain credit. Country ratings of B, C, and D indicate increasing risk, and concerns about default.
Coface's country rating is highly important in setting credit levels for Israeli companies in their international business transactions. The upgrade will reduce Israeli companies' foreign trade credit insurance premiums and may raise the credit levels that Israeli manufacturers and importers will be able to obtain. Foreign trade credit insurance is a critical tool for open credit between foreign suppliers and Israeli companies, so the country rating upgrade could save Israeli companies up to $100 million. The upgrade will also make about 400 more Israeli companies eligible for credit from foreign suppliers.
In 2009, foreign suppliers gave Israeli companies a total of $9.7 billion in credit, about 30% of total non-bank credit to the private sector.
Coface based its Israel country rating upgrade on data and research supplied by its Israeli subsidiary, BDICoface. Coface analyzed data on Israeli companies' credit risk, payment ethic to foreign suppliers, and Israeli macroeconomic figures.
Published by Globes [online], Israel business news - www.globes-online.com - on January 20, 2010
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