PARIS (Standard & Poor's) March 20, 2009--Standard & Poor's Ratings Services said today that it has assigned its 'A' rating to State of Israel's new US$1.5 billion global bond issue, maturing March 26, 2019. The rating is in line with our 'A' long-term foreign currency sovereign credit rating on the State of Israel (foreign currency A/Stable/A-1; local currency AA-/Stable/A-1+).
The government is tapping the global bond market for the first time since November 2006 to finance part of its budget deficit in 2009, which we expect will widen to 6% of GDP, due to spending pressures and falling tax receipts severely affected by the economic crisis. The bond will cover only part of the borrowing needs for 2009, but the loan guarantee program with the U.S. and the Jewish diaspora's State of Israel bonds should allow Israel to secure additional external financing throughout 2009. General government debt will subsequently increase to an expected 84% of GDP in 2009, which will remain almost twice the median of the 'A' rating category (39%).
In the currently uncertain global environment, the bond will also serve as a benchmark in the global markets for Israeli companies.
For additional information regarding our rating on Israel, please refer to our analysis titled "Israel (State of)," published March 13, 2009, on RatingsDirect.
