S&P Maintains Israel's Credit Rating, Stable Outlook, Matching Moody's and Fitch
Translated & summarized from Maariv by baba
S&P has maintained Israel's credit rating at A with a stable outlook, aligning with Moody's and Fitch. The rating, however, is still lower than pre-war levels, with agencies citing security risks and increased defense spending. S&P projects Israel's debt-to-GDP ratio to reach 68% by 2029, but anticipates economic growth of nearly 6% in 2027. Fitch remains the only agency with a negative outlook, citing potential political instability.
The story in 5 lines · by baba
- S&P affirmed Israel's credit rating at A with a stable outlook, matching Moody's and Fitch.
- Israel's current credit rating of A remains below its pre-war level.
- S&P cited security risks and increased defense spending as key concerns for Israel's economy.
- The debt-to-GDP ratio is projected to reach 68% by 2029, with growth expected in 2027.
- Fitch is the only agency maintaining a negative outlook on Israel's credit rating.
Credit rating agency S&P has affirmed Israel's credit rating at A with a stable outlook, mirroring decisions made by Moody's and Fitch. Despite these affirmations, Israel's rating remains below its pre-war level, with agencies highlighting ongoing economic and institutional risks. S&P did not issue a detailed report justifying its decision, stating that no significant changes in credit assessment factors necessitated a new report, thus keeping its May assessments in effect.
Israel's credit rating was significantly impacted by the war, dropping from AA- before the conflict to A+ in April 2024, and further to A in October 2024. The outlook was negative for about a year before being revised to stable a month after the Gaza ceasefire. S&P acknowledged Israel's economic strengths, including its high-tech sector, innovation, service exports, foreign reserves, and central bank policies. However, it also pointed to security risks and increased defense spending, projected to exceed 7% of GDP this year and remain high.
S&P forecasts Israel's debt-to-GDP ratio to reach approximately 68% by 2029 due to budget deficits, but anticipates economic recovery and nearly 6% growth in 2027. Moody's, meanwhile, has warned of potential impacts on judicial independence, which could affect the assessment of state institutions' strength. Moody's also revised Israel's 2027 growth forecast upward to 6% and lowered the current year's deficit forecast to 5% of GDP.
Fitch, like S&P, rates Israel at A but maintains a negative outlook, indicating a possibility of further downgrades. Fitch anticipates that the 2027 state budget will not be approved before new elections, leading to interim governance under a continuing budget. The agency believes this situation, while potentially reducing the deficit, may stem from political stagnation limiting government spending rather than structural fiscal improvement.
Despite the three agencies avoiding further downgrades, Israel has not yet recovered to its pre-war credit rating. S&P's next review is expected in about six months.
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