Fitch Retains Israel High Credit Ratings, Despite Tensions With Iran

In statement, firm's official cites Israel's strong institutions, solid macroeconomic performance, adding, however, that escalation with Iran would have an a immediate negative effect.

Fitch Ratings affirmed Israel's high long-terms foreign and local currency ratings on Wednesday, declaring the country's outlook as stable, despite ongoing tensions with Iran over its contentious nuclear program.

In a statement, Fitch Ratings indicated it retained Israel's "long-term foreign and local currency Issuer Default Ratings (IDR) at 'A' and 'A+' respectively. "

Stanley Fischer - Emil Salman - 25.11.2011
Emil Salman

"The Outlooks on the Long-term IDRs are Stable. Fitch has simultaneously affirmed Israel's Short-term IDR at 'F1' and Country Ceiling at 'AA-'" the statement added, citing Israel's strong institutions and solid recent macroeconomic performance, rich, diversified economy and strong external balance sheet against a high level of government debt and longstanding geopolitical concerns. "

Fitch official Richard Fox said that the "Outlook remains Stable despite the uncertainties surrounding the Iran situation. Specifically, the rating does not incorporate event risk in the shape of a possible attack on Iran's nuclear facilities."

The statement added that with sanctions against Iran in place, and with nuclear talks resumed, hostilities in the region were "unlikely."

However, the Fitch missive warned against the immediate impact a military deterioration taking place, saying that, in "that event, it would likely lead to immediate negative rating action, with the final rating outcome depending on the extent of the economic and physical damage that Israel might suffer. "

"Conversely, the rating does not factor in the longer term benefits of Israel's newly discovered natural gas resources, as substantial benefits will only accrue beyond the rating time horizon," Fox added.