Fitch Ratings has highlighted that the ongoing conflict between Israel and Iran is increasing regional security risks in the Middle East. Both Fitch and S&P have warned that the escalation raises geopolitical and security concerns across the region. Fitch further noted that if the conflict does not prolong, the credit rating level for the Middle East region could remain stable despite a negative outlook. Meanwhile, Moody's has maintained Israel's credit rating at Baa1 but assigned a negative outlook. Moody's cautioned that continued military tensions with Iran and rising defense costs are likely to exacerbate Israel's fiscal strain. Since October 2023, geopolitical risks have put pressure on Israel's finances, with Moody's forecasting a peak in Israel's debt-to-GDP ratio. The credit rating agency warned that if security risks persist, there is a possibility of further rating downgrades for Israel.