S&P reaffirms Israel’s credit rating after downgrades in 2024, outlook stays ‘negative’

S&P reaffirms Israel’s A/A-1 credit rating — which it downgraded twice last year — while keeping its outlook negative, warning that “the conflict between Israel, Hamas, and other proxies of Iran could substantially weaken Israel’s economy, public finances, and balance-of-payments position, particularly if the conflict escalates.”

“We could lower our ratings on Israel in the next 24 months if the military conflicts hamper the country’s economic growth, fiscal position, and balance of payments more than we currently anticipate,” the credit ratings agency writes in its report. “This could be the case, for example, if the ongoing conflict persists, raising the risks of retaliatory attacks against Israel, or if the prospect of a direct war between Israel and Iran increases.”

Despite these risks, S&P says it could revise the outlook to stable from negative “if we observed a reduced likelihood of military escalation and broader security risks reduced.”