Agency says Israel has no ‘exit strategy’ from conflict, which would help calm investors, and it ‘no longer expects a swift and strong economic recovery’ US rating agency Moody’s downgraded Israel’s credit rating for a second time this year on Friday, doing so this time by two notches, while citing the increased intensity of Israel’s fighting with Lebanon’s Hezbollah terror group the lack of Israeli “exit strategy.”

The prominent credit rating agency cut Israel’s score from A2 to Baa1, raising concerns that domestic political risks have increased alongside geopolitical ones “with material negative consequences for the country’s creditworthiness in both the near and longer term.”

A lower credit rating makes it more expensive for the Israeli government to raise debt at a time when it needs billions of shekels to fund the costs of the ongoing war and while investors see more risk to invest in the country.

Direct war costs have ballooned to more than NIS 250 billion ($67.6 billion) since the fighting erupted on October 7, after Hamas terrorists invaded Israeli southern communities, killing some 1,200 people, mostly civilians, and taking 251 as hostages into the Gaza Strip.

Since October 8, Hezbollah-led forces have attacked Israeli communities and military posts along the border on a near-daily basis, with the group saying it is doing so to support Palestinians in Gaza amid the war there.

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