Israel's credit rating is widely expected to be downgraded (Al Jazeera)
The Israeli newspaper Jerusalem Post expected that Israeli settlers would be affected if Israel's credit rating was lowered; This is an expected step from several rating agencies.
The newspaper quoted Trust Fund, deputy director of marketing and sales at Ayalon, as saying: “The markets are already taking into account a reduction in the interest rate and risk premium for Israel with the decline in the credit rating.”
The market's protective reaction means that the damage has already been done, long before the official rating is published, according to the newspaper.
Current market conditions have prompted lenders to demand higher interest rates even before any downgrade is announced, and the expectation of a lower credit rating has led to the immediate effect of increasing borrowing costs for individuals and companies, according to the newspaper.
According to the Jerusalem Post, this ripple effect can be felt across various sectors of the economy, affecting everything from mortgage rates to business loans.
Infographic of Israel's economic losses due to the Gaza War (Al Jazeera)
Credit rating forecasts
According to the newspaper, the market is adjusting its expectations in light of Israel's low creditworthiness, and has already taken into account the potential decrease in interest and risk premium associated with a lower credit rating, which translates into higher borrowing costs for the government and reduced resources available for basic services and investments.
The newspaper points out that the actual damage does not lie in waiting for the official credit rating to be lowered, as the repercussions have already begun to be felt in the form of increased interest rates and the resulting pressure on the settlers’ pockets. Therefore, the importance of the event is not limited only to its direct financial effects, but rather Also in increasing awareness and understanding of its long-term consequences.
While Moody's credit rating agency prepares to issue its assessment in the coming days, it has become necessary to closely monitor the results and potential measures that will be taken to address the economic challenges that Israel is currently facing, according to the newspaper, which expected that the decisions of the rating agencies will have a lasting impact on the financial landscape, the government's financial policies and pockets. Settlers.
Standard & Poor's
A director at the credit rating agency Standard & Poor's said the day before yesterday that the agency may lower Israel's rating if the war on the Gaza Strip expands to other fronts, but he expected that Israel would be able to bear the economic repercussions of the war if it did not expand by making the necessary adjustments in the budget. To compensate for higher spending.
In October, the agency confirmed Israel's rating at AA; But it revised its future outlook to negative from stable, pointing to the risks of expanding the war between Israel and the Islamic Resistance Movement (Hamas) with a more clear impact on the economy and the security situation.
Reuters quoted Maxim Rybnikov, director of sovereign debt and public finance ratings for Europe, the Middle East and Africa at Standard & Poor's, as saying in comments sent via email: “The negative outlook currently indicates at least one opportunity for a rating downgrade during the next year or two.”
He explained that if the security and geopolitical risks facing Israel increase due to the escalation of the conflict, i.e. a direct confrontation with Hezbollah in Lebanon or a confrontation with Iran, this may lead to a downgrade of the rating.
Source: Jerusalem Post + Agencies