As the conflict between Israel and Hezbollah in Lebanon escalated in the region, Moody's downgraded Israel's credit rating by two levels from “A2” to “Baa1” on Friday and maintained a negative outlook. Moody's said, “The main reason for downgrading the rating is that we believe the geopolitical risk has further increased significantly and reached a very high level, which will have a substantial negative impact on Israel's recent and long-term creditworthiness.” Moody's warned that uncertainty about Israel's security and long-term economic growth prospects is “far above the typical level of the Baa rating,” and that falling below this level means Israel will lose its investment grade rating. Moody's said, “If the current tension with Hezbollah escalates into a full-scale conflict, Israel's rating may be further downgraded, possibly by several levels.”

As the conflict between Israel and Hezbollah in Lebanon escalated in the region, Moody's downgraded Israel's credit rating by two levels from “A2” to “Baa1” on Friday and maintained a negative outlook. Moody's said, “The main reason for downgrading the rating is that we believe the geopolitical risk has further increased significantly and reached a very high level, which will have a substantial negative impact on Israel's recent and long-term creditworthiness.” Moody's warned that uncertainty about Israel's security and long-term economic growth prospects is “far above the typical level of the Baa rating,” and that falling below this level means Israel will lose its investment grade rating. Moody's said, “If the current tension with Hezbollah escalates into a full-scale conflict, Israel's rating may be further downgraded, possibly by several levels.”