Moody’s Downgrades Israel’s Credit Rating, Raising Concerns of Further Downgrades
In a note released on Monday, Citi analysts confirmed that Moody’s downgrade of Israel’s credit rating from A1 to A2 was largely anticipated by the market, but still had an impact on investor sentiment. Moody’s also changed the outlook for the rating to negative, citing geopolitical risks and institutional quality as key concerns.
Despite the downgrade, Citi pointed out that Israel’s credit rating still stands at a respectable five notches above “junk” level, putting it on par with countries like Poland. However, the negative outlook implies that further downgrades may be possible in the future.
The unexpected negative outlook and the subsequent domestic political reaction have caught some off guard, according to Citi. The investment bank’s analysts warned that other rating agencies could plausibly follow Moody’s move, with the S&P rating – currently at AA- and seven notches above ‘junk’ – being particularly vulnerable.
The market’s reaction in the coming days will undoubtedly play a role in the upcoming rate decision by the Bank of Israel, added Citi.
Analysts and investors will closely monitor the situation, as any further deterioration in Israel’s credit rating could have significant implications for the country’s borrowing costs and overall economic outlook.
Analyst comment
Negative news. Analysts predict that other rating agencies may follow Moody’s downgrade, and Israel’s credit rating could potentially face further downgrades. The market reaction will influence the upcoming rate decision by the Bank of Israel. Further deterioration in the credit rating could impact borrowing costs and the overall economic outlook.
