Israel's Credit Rating at Risk: Moody's Potential Downgrade Amidst Tensions with Hamas

Moody's Investors Service issued a warning on Thursday stating that Israel's credit rating may be downgraded due to the significant impact of the ongoing military conflict with Hamas. This potential downgrade could lead to increased borrowing costs for Israel at a time when the country is preparing for a potentially long-lasting war.

Moodys stated that Israels credit profile has shown resilience in the face of terrorist attacks and military conflicts in the past; however, the severity of the current military conflict increases the likelihood of a significant and prolonged impact on the country's credit. The duration and scale of the conflict, along with its effects on Israels economy, institutions, and public finances, will be the main focus of Moodys review. The credit ratings agency also mentioned that the review process might extend beyond the usual three-month period.

Prior to the Hamas terrorist attacks in July, Moodys issued a warning regarding the contentious revamp of Israel's judicial system. They cautioned that this could potentially lead to increased unrest, which might negatively impact the country's economy and security.

In July, the Israeli parliament passed a law that effectively weakened the Supreme Court's authority to impede government decisions. This contentious action spawned vehement protests, threats of strikes from workers, and disinvestment from investors.