Fitch puts Israel under ‘ratings watch’

The US-based credit rating agency Fitch placed Israel’s A+ sovereign credit score on rating watch negative on Tuesday due to geopolitical risks arising from the Gaza conflict.

That adverse monitoring reflects the risk that the ongoing conflict may escalate to include multiple actors over a long period.

The expansion of hostilities, in addition to human casualties, could prompt significant additional military spending, the destruction of infrastructure, and a sustained change in consumer and investment confidence. According to the rating agency, all these factors would significantly deteriorate Israel’s credit metrics.

“The combination of Israel’s dynamic, high-value added economy, the record of resilience to regional conflict, preparedness for military confrontations, solid fiscal and external metrics and cash buffers make it unlikely a relatively short conflict largely confined to Gaza will affect Israel’s rating,” Fitch said.

Israel has never been downgraded by Fitch or other international rating agencies such as S&P Global and Moody’s. However, Moody’s warned last week that a prolonged conflict could hurt the country’s credit rating.

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