Moody's downgraded Israel's credit rating to “A2” with a negative outlook, while Israeli Prime Minister Benjamin Netanyahu commented on this, saying, “Israel's economy is strong, and the reason for lowering the credit rating is that we We are at war.”
Moody's said the reason for downgrading Israel's credit rating was the war with the Islamic Resistance Movement (Hamas) and its consequences. The agency also expected that the debt burden in Israel would increase above pre-war expectations.
Moody's said the risk of conflict escalation with Hezbollah still exists, raising the possibility of a significant negative impact on the Israeli economy.
Meanwhile, Netanyahu immediately downplayed the significance of the downgrade, noting that Israel's economy is strong, and that the credit rating downgrade was due to the war, adding that “the economy will return to recovery after victory.”
Credit ratings generally reflect the extent of confidence in countries' ability to obtain credit and their ability to meet financial obligations on time.
The better the rating, the lower the risks associated with borrowing, thus resulting in better terms and lower borrowing costs.