S&P Downgrades Israel’s Sovereign Rating

There are “heightened geopolitical risks” behind the radical decision

International rating agency S&P Global Ratings downgraded Israel’s sovereign rating from AA– to A+ with a “negative” outlook due to “high geopolitical risks” stemming from the conflict in Gaza and escalating tensions with Iran. In a note, S&P experts wrote that “the recent increase in the level of confrontation with Iran further raises the already high geopolitical risk for Israel.”

The agency also emphasized that the decision to downgrade the rating of the Jewish state was made even before the Israeli attack on the Iranian airbase near the city of Isfahan. S&P’s “negative” outlook “reflects the risk that the war between Israel and Hamas and the clash with Hezbollah could worsen and affect the Israeli economy.”

The agency said it hoped the parties could avoid “broader regional conflict,” but the war between Israel and Hamas and the confrontation with Hezbollah would “likely continue throughout 2024, contrary to our previous assumptions that military activity would last no more than six months.”