S&P Affirms Israel's 'A' Credit Rating with Stable Outlook
Translated & summarized from Vesty by baba
International rating agency S&P affirmed Israel's credit rating at 'A' with a stable outlook following its semi-annual review on November 6. The agency did not publish a detailed report, stating that core rating factors remained unchanged. Israel's rating is two notches below its pre-war level, with S&P citing high defense spending as a key pressure. Meanwhile, Moody's maintains a Baa1 rating with a stable outlook, warning of risks to state institutions, while Fitch holds an 'A' rating but a negative outlook, citing political instability concerns.
The story in 5 lines · by baba
- S&P affirmed Israel's credit rating at 'A' with a stable outlook after its semi-annual review.
- The agency cited unchanged core rating factors, including high defense spending, as reasons for the affirmation.
- Israel's current 'A' rating remains two notches below its pre-war AA- level.
- Moody's maintains Israel's rating at Baa1 with a stable outlook, highlighting risks to state institutions.
- Fitch affirmed Israel's 'A' rating but kept a negative outlook due to political instability concerns.
International rating agency S&P concluded its scheduled semi-annual review of Israel's credit rating on Friday, November 6, maintaining the country's rating at 'A' with a stable outlook. The agency did not publish a separate report, explaining that such reports are not always issued when the core factors determining the rating remain unchanged. This was the case for Israel, according to S&P representatives responding to a query from the economic publication "Calcalist" on Saturday, November 7. S&P's procedures allow for a review to be escalated to a rating committee for a potential rating change, but this did not occur for Israel.
European Union regulations mandate that rating agencies review sovereign credit ratings at least every six months on predetermined dates. Any change in rating or outlook requires official publication, typically after 9 PM British time. However, when a rating is affirmed without changes, agencies have discretion over whether to release a detailed report. S&P chose not to do so for Israel, while simultaneously publishing detailed reports for Poland, Andorra, Burkina Faso, Uganda, and the Italian region of Campania on the same day.
The decision by S&P signifies that the agency found no further deterioration in Israel's creditworthiness but also no grounds for an upgrade. In November 2025, following a ceasefire in Gaza, S&P had revised Israel's outlook from negative to stable. The rating and outlook were affirmed in May 2026. Throughout 2026, S&P repeatedly cited high defense expenditures as a primary factor pressuring the country's credit rating, estimating them to exceed 7% of GDP in 2026 and remain high in the medium term. This current affirmation suggests that the assessment of key risk factors, including the impact of significant military spending on public finances, has not changed since May. Israel's credit rating remains two notches below its pre-war level of AA-.
S&P's silence contrasts with recent actions by Moody's and Fitch, which published special reviews following Israel's elections without altering the country's ratings. Moody's maintains Israel's rating at Baa1 with a stable outlook, viewing the election results as unlikely to have an immediate impact due to broad policy similarities among major parties. Moody's identifies the primary risk as the weakening of state institutions, warning that continued undermining of judicial independence could lead to a downgrade of its institutional strength assessment.
Fitch, while affirming Israel's 'A' rating, maintains a negative outlook, focusing on the risk of a return to political instability and transitional governments, similar to the 2019-2022 period. Fitch deems it unlikely that a state budget for 2027 will be approved before new elections, potentially forcing the country to operate under a transitional budget that limits government spending. The agency cautions that deficit reduction achieved through political paralysis, rather than sustainable fiscal consolidation, would not be viewed as genuine financial recovery. Fitch indicates that long-term, consistent measures to strengthen the government's financial position would be necessary for a credit rating upgrade.
