Business Maverick

Business Maverick

S&P cuts Israel rating on heightened geopolitical risk

S&P cuts Israel rating on heightened geopolitical risk
Israeli Soldiers from Unit 98 perform maintenance work on their tanks after withdrawing from Khan Yunis in the southern Gaza Strip, at an undisclosed location near the Gaza border, Israel, 08 April 2024. EPA-EFE/ATEF SAFADI

Israel was downgraded by S&P Global Ratings, which cited heightened geopolitical risks as it lowered the sovereign credit rating to A+ from AA- on Thursday.

The nation was cut by one notch to the fifth-highest score, on par with Bermuda and China. The outlook remains negative. 

“The recent increase in confrontation with Iran heightens already elevated geopolitical risks for Israel,” the company’s statement said. 

S&P said a wider regional conflict was not its baseline scenario, but could have a further material negative impact on Israel’s security situation. That would then impact its economic, fiscal, and balance-of-payments parameters.

All three major rating firms have put out warnings on Israel’s credit score since the onset of the war with Hamas. On 25 October, S&P revised the outlook to negative on risks the conflict spreads into the country. Moody’s Ratings gave the nation its first-ever sovereign rating downgrade in February, assigning the nation the sixth-highest investment-grade score. 

Tensions in the region have intensified since Iran launched a barrage of drones and missiles on Israel in response to a strike in Syria that killed several Iranian officers on 1 April. Tehran is bracing for a potential Israeli retaliation.

Israel Versus Iran — What All-Out War Could Look Like: QuickTake

S&P forecast that Israel’s general government deficit will widen to 8% of gross domestic product in 2024, mostly as a result of increased defense spending. It expects higher deficits to persist over the medium term and net general government debt to peak at 66% of GDP in 2026.


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