S&P Global revised Israel’s outlook to “negative” from “stable” on Tuesday, citing risks that the Israel-Hamas war could spread more widely with a more pronounced impact on the economy and security situation in the country.
Last week, peer Fitch placed Israel’s sovereign debt rating of “A+” on rating watch negative and warned that a major escalation of the ongoing conflict with the Palestinian terrorist group Hamas could result in a negative rating action.
“We currently assume the conflict will remain centered in Gaza and last no more than three to six months,” S&P said in a statement.
Outlook could be revised to “stable”
S&P could revise the outlook to “stable” if the conflict is resolved, resulting in a “reduction in regional and domestic security risks without a material longer-term toll on Israel’s economy and public finances.”
It added that international support could mitigate some of the negative macroeconomic effects on Israel.
The agency affirmed the country’s “AA-/A-1+” long-term and short-term foreign and local currency sovereign credit ratings.