Moody’s: Durable Hamas ceasefire would fend off further Israel credit rating downgrades
Credit rating agency cites ‘domestic political challenges and security concerns’ as obstacles to a permanent ceasefire with Hamas in Gaza
Sharon Wrobel is a tech reporter for The Times of Israel.
A durable ceasefire with the Hamas terror group in the war in Gaza would reduce “downside risks to Israel’s economy and public finances,” Moody’s Investors Service said on Tuesday.
The credit rating agency noted that “if adhered to and further progress is made” on the Gaza ceasefire and hostage release deal that came into effect this week, it would also lower the “tail risks for the Middle East region from an escalation that involves Iran, and the conflict’s spillover effect on global supply chains from Red Sea shipping disruptions.”
“However, the terms of the ceasefire agreement are limited in scope and duration currently… further negotiations will be required to secure a permanent cessation of hostilities and durably lower regional geopolitical tensions,” said Moody’s senior analyst Christian Fang.
Fang raised concerns that “domestic political challenges and security concerns are some hurdles for Israel that may impede further progress.”
The three-phase ceasefire-hostage deal between Israel and the Palestinian terror group came into effect Sunday morning, bringing a halt to the war which began when Hamas-led terrorists invaded southern Israel, killing over 1,200 people and kidnapping 251 hostages during their October 7, 2023, onslaught.
Last week Fitch’s top sovereign rating analyst James Longsdon indicated that a ceasefire with the Palestinian terror group would take off pressure for further downgrades of Israel’s country credit rating.

Both Fitch and Moody’s over the past year lowered Israel’s credit score and maintained a negative outlook, warning that the country could be facing further downgrades and citing the risk of a severe escalation of the regional conflict with Hezbollah in the north further weakening the country’s economic and fiscal strength.
Moody’s in September cut Israel’s credit rating by two levels from A2 to Baa1, citing “diminished quality of Israel’s institutions and governance” to manage state finances, and increased spending needs during the war period. A lower rating raises credit costs for the government, businesses and households.
As part of the first phase of the ceasefire deal, Hamas on Sunday released three hostages, and Israel released the first 90 of nearly 2,000 Palestinian security prisoners set to be freed. The other 30 hostages on the list are to be released each Saturday until the end of the deal’s 42-day first phase.
Beyond the 33 on the list, 65 more people are held by Hamas, some of them no longer alive. These are to be returned as part of a second phase of a deal, if it comes to pass, which would be concluded with a permanent ceasefire in Gaza.
“Regional geopolitical tensions will remain heightened in the absence of a durable ceasefire and deescalation of tensions,” stated Fang. “Resumption of hostilities or renewed exchanges of fire between Israel and Iran-backed groups or Iran can quickly reignite escalation risks.”
Times of Israel staff contributed to this report.