S&P downgrades Israel’s long-term ratings to ‘A’ amid Hezbollah conflict

(Reuters) -S&P Global downgraded Israel’s long-term ratings to ‘A’ from ‘A+’ on Tuesday, citing risks to the country’s economy and public finances from the escalating conflict with Iran-backed armed movement Hezbollah in Lebanon.

The rating agency highlighted concerns over potential security threats, including retaliatory rocket attacks against Israel, which could worsen the economic impact.

Peer Moody’s (NYSE:MCO) cut the country’s credit rating two notches to “Baa1” last week and warned of a drop to ‘junk’ if the current heightened tensions with Hezbollah turned into a full-scale conflict.

“We now consider that military activity in Gaza and an upsurge in fighting across Israel’s northern border – including a ground incursion into Lebanon – could persist into 2025, with risks of retaliation against Israel,” S&P said.

S&P maintained Israel’s outlook at “negative”.