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S&P cut its Israel debt rating to A+ on geopolitical risks
The agency cut its rating from AA- to A+, and said the outlook was negative.
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Israeli military spokesman Rear Admiral Daniel Hagari (right) and his deputy Masha Michelson pose next to an Iranian ballistic missile which fell in Israel on the weekend, during a media tour at the Julis military base near the southern Israeli city of Kiryat Malachi on April 16, 2024. (AFP/Gil Cohen-Magen)
T
he S&P global rating agency downgraded its rating on Israel's long-term debt amid regional tensions, it said in a statement issued late Thursday, just before reports of an Israeli revenge attack on arch-foe Iran.
The agency cut its rating from AA- to A+, and said the outlook was negative.
"The recent increase in confrontation with Iran heightens already elevated geopolitical risks for Israel," S&P said in its statement.
The rating downgrade may add pressure on Israel’s bonds and the shekel, which has fallen this year against the dollar.
"We expect a wider regional conflict will be avoided, but the Israel-Hamas war and the confrontation with Hezbollah appear set to continue throughout 2024 -- versus our previous assumption of military activity not lasting more than six months," it said.
S&P also said that it expects Israel's deficit to widen to 8 percent of GDP in 2024, "mostly as a result of increased defense spending.
"Higher deficits will also persist over the medium term, and we expect net general government debt to peak at 66 percent of GDP in 2026."
S&P said it could "lower the ratings on Israel if the ongoing conflicts widen, further increasing the security and geopolitical risks that Israel faces."
