Will Israel's credit rating go down?
The international credit rating company Moody's is expected to publish in the near future its decision regarding Israel's credit rating, and according to quite a few economists, Israel's rating is expected to decrease.
The Ministry of Finance also says that this is already "priced" in the bond market.
However, according to senior officials in the capital market who met today (Tuesday) with Moody's company representatives, it is difficult to predict what the decision will be regarding the rating, nor was it possible to receive information regarding the exact date on which the decision will be published.
According to one of the participants in the conversation, "Moody's is very concerned about the budget decision-making process and the lack of transparency in this process. It was also evident that they are concerned about an increase in the government's structural deficit in light of the increase in defense spending."
Fitch left Israel's credit rating unchanged, Netanyahu: "very good news" (archive) \\ Video: Omer Miron / L.A.M., Sound: Ben Peretz / L.A.M.
On the other hand, according to the same senior source, Moody's is well aware of Israel's good fiscal data, and especially the relatively low ratio of public debt to GDP.
Another participant in the talks concluded by saying that there is no doubt that Moody's believes that Israel's economic and financial risk has increased significantly, "but at the moment the probabilities of a downgrade versus no change in the rating are equal, 50-50."
The delay that worries
The fact that the state budget approved by the government has not yet been submitted to the Knesset for approval and deviates from the planned schedule does not add merit points to the Israeli government in the eyes of the rating companies.
With the outbreak of the war, the rating companies Moody's and Fitch put Israel under negative surveillance.
The meaning - monitoring the state of the economy for three months, after which the decision will be made whether to downgrade or not.
Statistically, when Moody's puts countries on negative watch, in 70-80% of the cases the actual credit rating has dropped.
We will also mention that in October the rating agency S&P confirmed Israel's rating at the level of AA-, but lowered the rating forecast for Israel from "stable" to "negative".
The agency stated, among other things, that the outbreak of a multi-system war could lead to a drop in the actual rating in the next rating announcement.
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