War or not, Israel’s a great place to invest: Moody’s

Despite the costly summer war in Gaza, Israel’s economy is still in good shape, as far as international credit rating agency Moody’s is concerned. In a report issued Wednesday, Moody’s maintained Israel’s previous A1 stable outlook. Economic growth, entrepreneurial dynamism, and a stable political system ensured that Israel would remain a good risk for investors, the agency said. A1 is among Moody’s highest ratings.

Moody’s report completes a positive “triple crown” of post-Gaza war ratings for the country by agencies. Last month, S&P gave Israel an A+ Stable rating, and Fitch assigned Israel an A Positive rating. The ratings mean that the agencies believe Israel’s debts are “judged to be upper-medium grade,” subject to low credit risk. Most countries outside North America and Western Europe, except for China, Australia, and the Gulf states, are rated lower by all three agencies.

Ratings by Moody’s and the other agencies are not just indicators of how an economy is doing. They are a key factor in how much a country will have to pay to finance its expenses. A higher agency rating means that a country can borrow money at lower interest rates from international banks and agencies, and it can pay lower interest rates on bonds and other obligations it sells. Countries with lower ratings are riskier investments – meaning that there is a greater chance that investors won’t get all their money back – and they have to pay more both to banks and investors in order to attract capital.

In its report, Moody’s acknowledged the effects of Operation Protective Edge. “Israel’s extensive geopolitical challenges continue to constrain the ratings,” the agency said. “These include territorial disputes with the Palestinians, intense civil strife in Egypt and Syria and the stand-off with Iran over its nuclear program. Intermittent conflicts pose near- to medium-term risks for the public finances and impair Israel’s standing in the international community.”

http://www.timesofisrael.com/war-or-not-israels-a-great-place-to-invest-moodys/