In the absence of extreme events of the last minute, the rating agency Standard & Poors (S&P) is expected to leave both Israel's credit rating, AA-, and the credit rating forecast which is stable, intact. This is in line with Fitch, which also did not lower the rating, and unlike Moody's, which did decide to lower the rating forecast from "positive" to stable.
This seemingly technical fact hides a huge drama that has unfolded in recent days around this issue. According to reports from the Israeli newspaper “Calcalist” Prime Minister Benjamin Netanyahu himself was busy in recent days talking to S&P officials to ensure Israel’s economic stability is reflected in their report. In those conversations, Netanyahu explained that the Judicial reform would not be carried out in its original form, and according to the same sources, these statements calmed the S&P economists and convinced them not to lower the score in this aspect.
"In those conversations, Netanyahu explained that the judicial overhaul would not be carried out in its original form." So why is the original still on the table?
— Shira (@shirazim) May 10, 2023
S&P to affirm Israel rating after Netanyahu guarantees firm to halt judicial overhaul | Ctech https://t.co/jBsLrlOBy7
It appears that Netanyahu had greater success in his dealings with S&P than he had with Moody's rating agency. Netanyahu also tried to convince them not to lower the rating forecast but failed. Part of the difference lies in the timing; Moody's preliminary tour of Israel was held in the midst of the legislative blitz of the judicial reform and at the height of protests across the country. On the other hand, Maxim Rybnikov, the rater on behalf of S&P, and his teams arrived in Israel after Netanyahu stopped the legislative proceedings, while the negotiation teams had already gathered in the President's residence. These circumstances made it far easier for Netanyahu to convince S&P not to downgrade the forecast over fears from the current Israeli government.
The president of Israel, Isaac Herzog, was also involved in the attempts of persuasion. Those around him explained that the president explained to the people of the rating agency the processes and the dynamics of the talks at his home and that he spoke for the benefit of the country and the economy.
After Moody’s downgraded Israel's credit outlook, Netanyahu tries to prevent S&P from following suit https://t.co/A4M6P2IDTJ
— All Israel News (@all_israel_news) May 10, 2023
The S&P agency is expected to publish its semi-annual report and the final decision on the rating this coming Friday, late in the evening. A few days ago, S&P published the monthly snapshot of the credit rating of all countries, and according to analyzes by several factors in the capital market as well as in the government, the signals are in the direction of no change in Israel's rating.
