Moody’s lowered the credit rating of the Israeli Electricity Company by one notch to “Baa2” with a negative outlook, a week after it lowered the rating of Israel’s economy by two notches, according to what was reported by the Israeli newspaper Calcalist.
This reduction is mainly due – according to Calcalist – to the downgrade of Israel’s sovereign rating, but it is not the only reason, as Moody’s pointed to the financial impacts resulting from the ongoing war, including the huge expenses incurred by the electricity company to purchase diesel fuel and protection materials.
Calcalist said that, since the beginning of the war, the electricity company has purchased diesel fuel worth hundreds of millions of shekels as a precaution to confront emergency scenarios.
Although these steps reflect the company’s importance to the Israeli economy and are supported by the government, these costs have significantly affected the company’s financial results.
Moody’s economists also explained that the electricity company’s debt is not backed by the government, which increases the financial risks associated with the company.
Although the company recorded strong financial results in its recent reports, which came largely as a result of the sale of the “Eshkol” power plant to “Dalia” for NIS 9.1 billion ($2.38 billion), Moody’s indicates that the electricity market may not maintain the same positive conditions. In the future, this was reflected in the company’s development plans, as Calcalist said it would make huge investments amounting to about 7 billion shekels ($1.83 billion) annually.
