Netanyahu tries to convince S&P not to cut rating

Prime Minister Benjamin Netanyahu recently spoke with top S&P executives in an effort to prevent the international credit rating agency from downgrading Israel’s credit rating outlook or credit rating, which currently stands at AA-. This Friday, Standard & Poor’s will publish its updated credit rating for Israel.

The current rating is considered high

S&P’s current credit rating of Israel is generally and particularly high compared to Moody’s. On the other hand, Standard & Poor’s expectations for Israel are stable and unlike Moody’s, lowering expectations would reduce Israel to negative, i.e. expecting a future downgrade in the actual credit rating itself. This will affect the ability of the Israeli government to raise capital to finance its debt.

Last month, Moody’s downgraded Israel’s credit outlook from positive to stable, citing Israel’s planned judicial reform and the country’s political situation as reasons for its decision, although it kept the credit rating itself unchanged, while in March Fitch did not change the outlook or credit rating. But he warned of the planned judicial reform.

Sources close to Netanyahu said that in his talks with Standard & Poor’s, he stressed Israel’s growth drivers and comparative advantages.

S&P’s impending decisions generated significant market interest as investors wondered whether or not Standard & Poor’s would follow in Moody’s footsteps and lower its rating outlook for Israel. Even the Ministry of Finance has held discussions about possibly having what is on the agenda.

Standard & Poor’s rating of Israel has remained unchanged over the past five years, ranking Israel alongside some of the world’s strongest economies such as Ireland, the Czech Republic, and Slovenia. This has enabled Israel to raise debt at relatively low interest rates and considers the country a low-risk environment for investors.

On the last occasion when Standard & Poor’s published Israel’s credit rating in November 2022, the agency stated positively that “Israel’s fiscal policy has strengthened and there is an expectation of a balanced budget for 2023.” On the negative side, the rating agency cited geopolitical factors: “Despite the Abraham Accords and the signing of a maritime border agreement with Lebanon, an escalation of hostilities with organizations surrounding Israel is certainly a real possibility.”

Published by Globes, Israel business news – en.globes.co.il – on May 8, 2023.

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