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S&P revises Israel’s outlook to ‘negative’ from ‘stable’

Flag outside the Bank of Israel Reuters/Ronen Zvulun
International support could mitigate some of the negative effects of the war with Hamas on Israel, S&P said
  • Risk of war with Hamas spreading
  • Move follows Fitch’s warning
  • Currency ratings unaffected

S&P Global revised Israel’s outlook to “negative” from “stable” on Tuesday, blaming 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 another big credit ratings agency, Fitch, placed Israel’s sovereign debt rating of “A+” on rating watch negative and warned that a major escalation of the conflict with the Palestinian Islamist group Hamas could result in a negative rating.

S&P said in a statement: “We currently assume the conflict will remain centred in Gaza and last no more than three to six months.”

It said it 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”.

S&P said 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.