Just two days before the credit rating announcement scheduled for Friday, Moody's is issuing a special report on Israel titled "The extent of the war's impact on Israel's credit rating depends on its duration and intensity."
In the report, the company's economists write: "On October 8, Israel declared a state of war in response to a large-scale event, a multi-directional attack by Hamas. The most important and worrying consequence of this violent confrontation is loss of life and security. The conflict could have implications for the Israeli debt issuers we rank. In the past, Israel's credit rating has shown resilience to terrorist attacks and military operations. However, a protracted conflict that prolongs and significantly impairs economic activity and policymaking will put this resilience to the test. Therefore, how this conflict affects financial and corporate credit risk will depend on its scope and duration, which is far from clear at this stage."
Chief of Staff Halevy in Northern Command: "Wherever there are Hamas leaders, the IDF attacks accurately and strongly" // Photo: IDF Spokesperson
It added that the war could lead to higher oil prices. "Although market indicators are likely to remain volatile during the conflict, the ongoing global slowdown, particularly in energy-intensive activities such as manufacturing and trade, will likely limit the continued rise to oil prices.
"However, a scenario in which military action escalates across the region and is accompanied by broad sanctions will have implications for both global growth and inflation. Central banks are ready to maintain their policy of higher interest rates in order to keep inflation in check, and markets are simply digesting this narrative of "higher for longer."
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