Moody’s has downgraded the credit rating of Israeli banks to A3 with a negative outlook, which may be grounds for further downgrades. This became known on Tuesday, February 13.
Moody’s credit rating approximately has the following gradations:
1. Aaa: highest level of reliability, minimal risk
2. Aa1, Aa2, Aa3: high level of reliability, low risk
3. A1, A2, A3: good level of reliability, moderate risk
4. Baa1, Baa2, Baa3: medium reliability level, moderate risk
5. Ba1, Ba2, Ba3: low reliability level, high risk
6. B1, B2, B3: low reliability level, very high risk.
7. Caa1, Caa2, Caa3: extremely low level of reliability, extremely high risk.
8. Ca: very low level of reliability, extremely high risk (inability to repay debt).
9. C: lowest level of reliability, extremely high risk (inability to repay debt)
At the same time, the agency emphasized that there is a high probability of government support for banks due to their important role in the country’s financial system. In addition, government support for banks when needed is an established practice.
The negative outlook was assigned due to concerns that the damage to the economy from the war will be greater than predicted. The possibility that war could break out in northern Israel has also been taken into account.
The downgrade of banks’ credit ratings will not affect customers. Banks in Israel are stable. According to Bank of Israel forecasts, there is no danger of severe crises like the one that occurred in Israel in 1983.
