Fitch Ratings removes Israel from rating watch negative as it assesses impact of Gaza war

Fitch Ratings removes Israel from rating watch negative and affirms the country’s A+ credit rating but with a negative outlook, as the agency is assessing the impact of the toll of the war with the Hamas terror group.

“Geopolitical risks associated with the war in Gaza remain elevated and escalation risks remain present, but Fitch believes the risks to the credit profile have broadened and their impact may take longer to assess,” Fitch says, citing the reasoning for removing the credit watch negative outlook.

Back in October, Fitch put Israel’s A+ credit score on rating watch negative due to the heightened risk of a major escalation in the war with Hamas, which it assessed could result in a negative rating action.

“Risks of a widening of Israel’s current conflict to include large-scale military confrontations with multiple actors – over a sustained period of time – remain high,” Fitch says in a statement.

“This is not our base case, but such large-scale escalation, in addition to human loss, could result in significant additional military spending, destruction of infrastructure, sustained change in consumer and investment sentiment, and thus lead to a large deterioration of Israel’s credit metrics.”