A top economic advisor to Prime Minister Benjamin Netanyahu, Avi Simhon, is advocating for an upgrade to Israel’s credit ratings following the October ceasefire with Hamas. Simhon, who heads Israel’s National Economic Council, contends that bond markets have already priced in a post-war scenario, warranting a re-evaluation by ratings agencies. This comes after S&P Global and Moody’s Investors Service both downgraded Israel for the first time following the eruption of the war in Gaza in 2023, citing ongoing risks and a fragile security environment.
S&P revised Israel’s outlook to stable from negative in November, but indicated that the credit score is not projected to change in the short-to-medium term, stating that a lasting peace agreement remains distant. Moody’s has maintained a negative outlook since 2024. Despite these downgrades, Israel remains within investment-grade territory, holding ratings of A and Baa1 from S&P and Moody’s, respectively. The agencies are expected to publish their next reviews in the first half of this year.
Simhon highlighted that spreads between Israeli US-denominated bonds and US Treasury bonds, which surged during the war, have now returned to pre-war levels. He criticised the ratings agencies for being overly focused on geopolitics and excessively hesitant in their assessment of Israel’s credit score. He also dismissed concerns from ratings agencies regarding the government’s attempts to weaken the judiciary, labelling them as mere “excuses.”
The National Economic Council advises the Prime Minister on economic policy, aiming to foster sustainable growth and improve living standards. Credit ratings are important because they reflect the creditworthiness of a country.
