Tel Aviv Stock Exchange<\/p>\n
Israel\u2019s sovereign credit rating on Tuesday was lowered by credit rating agency Morgan Stanley, and Moody’s warned of a “significant risk” that political and social tensions will lead to “negative consequences for Israel’s economy and security situation,” following the Knesset\u2019s vote to pass the first law of its controversial judicial reform<\/a> on Monday.<\/p>\n Morgan Stanley updated Israel\u2019s sovereign credit to a “dislike stance,” noting that the government has reaffirmed the trajectory of its economy in a direction that is likely to scare off investors.<\/a><\/p>\n “We see increased uncertainty about the economic outlook in the coming months and risks becoming skewed to our adverse scenario,\u201d the agency said. \u201cMarkets are now likely to extrapolate the future policy path and we move Israel sovereign credit to a ‘dislike stance.\u2019\u201d<\/p>\n They added that recent events indicate “ongoing uncertainty” in Israel and that the shekel is likely to continue depreciating alongside the Tel Aviv Stock Market, which has lost nearly 10% since November of last year.<\/p>\n Moody’s warned that there is “a significant risk that political and social tensions over the [judicial reform] will continue, with negative consequences for Israel’s economy and security situation.”<\/p>\n The credit rating agency warned that it believes that “the wide-ranging nature of the government’s proposals could materially weaken the judiciary’s independence and disrupt effective checks and balances between the various branches of government, which are important aspects of strong institutions.”<\/p>\n The agency added that “the executive and legislative institutions have become less predictable and more willing to create significant risks to economic and social stability.”<\/p>\n Moody\u2019s announcement was made outside of its standard schedule for rating updates, which would have seen the next update in October. Given the outlook of Morgan Stanley and prior statements from Moody\u2019s, the latter can likely be expected to demote Israel\u2019s rating as well.<\/p>\nShoveling more problems onto the pile<\/strong><\/h2>\n