War threat could see S&P cut Israel's rating

IDF soldier Photo: Shutterstock

S&P said last August that the situation in Syria increased Israel's risk.

Last August, S&P upgraded Israel's credit rating outlook to positive, a measure signifying a reasonable possibility of upgrading the country's credit rating in 6-24 months.

The capital market believed that S&P was likely to publish an announcement to investors following the recent events, but assessments are that if the current round of fighting does not escalate, there will be no further change. When S&P upgraded Israel's credit rating outlook in August, it said that it would change its decision in the event of a significant worsening in the security situation or in the Israeli government's financial performance. S&P has since refrained from upgrading Israel's credit rating and emphasized in its earlier revision that the geopolitical uncertainty in Syria created a greater risk for Israel.

The geopolitical situation has customarily been one of the two main risks for Israel's credit rating (together with a worsening of the financial situation and an uncontrolled increase in debt). It has been the main reason for not upgrading Israel's rating in recent years, despite the ongoing improvement in Israel's debt ratio and economic performance.

S&P current rating for Israel's sovereign debt is A+ following an upgrade in 2012. The agency has never downgraded Israel's credit rating and has changed its rating outlook for Israel to "negative" only once. S&P is the only credit rating agency considering a rating upgrade for Israel. The agency did not alter its rating for Israel during the Second Lebanon War or the military operations in the Gaza Strip.

Published by Globes [online], Israel business news - www.globes-online.com - on May 11, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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IDF soldier Photo: Shutterstock
IDF soldier Photo: Shutterstock
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