Moody’s Issues Unusual Warning to Israel, Tying Judicial Coup to Credit Rating Downgrade
The
credit rating company wrote that if the judicial overhaul will be
implemented in full, the proposed changed could ‘materially weaken the
strength of the judiciary and as such be credit negative’
International credit rating agency Moody’s Investors Service issued an extremely unusual warning to Israel on Tuesday, directly warning that if the judicial revolution in Israel proceeds as planned, the country’s sovereign credit rating outlook could be downgraded from positive to stable.
The credit rating company wrote that if the judicial overhaul is implemented in full, the proposed changes could “materially weaken the strength of the judiciary and as such be credit negative.”
The warning further states that the planned changes could “pose longer-term risks for Israel’s economic prospects, particularly capital inflows into the important high-tech sector.”
This is an unusual move, as Moody’s typically does not issue statements to investors outside the regular date for publishing credit rating announcements. Israel’s credit rating has not been changed because Moody’s rating committee has not yet met, but the unusually timed publication indicates that once the committee meets in a few months, Moody’s will go ahead and lower Israel’s credit rating outlook should the judicial overhaul go ahead.
Moody’s currently gives Israel a credit rating of A+ with a positive outlook. The positive outlook means the rating agency is considering raising Israel’s credit rating. If Moody’s changes the outlook from positive to stable, this means Israel is unlikely to benefit from an improved credit rating anytime soon.
Moody’s stated that it could lower its outlook for Israel due to the judicial overhaul and even writes that this factor outweighs Israel’s very positive economic data, including the government’s budget surplus. This is a blatant warning and would constitute direct damage to Israel’s economy from the regime coup.