Bethel Finance: Moody's cuts Israel's banking outlook to negative

www.bethelfinance.com International ratings agency Moody's has downgraded its outlook for Israel's banking sector from "Stable" to "Negative." According to Moody's the new outlook reflects the expected slowdown in growth, and the challenging environment expected in Israel over the next year to 18 months. The report said, "The banks' capital metrics are tight relative to those of global peers. The weakness in the Israeli corporate-bond market poses credit risks for the quality of assets the banks hold because of the banks' high credit concentrations in domestic corporate conglomerates." The report added that Israel's environment will continue to be challenging with GDP growth expected to slow significantly in 2012 mainly sue to lower exports due to the insoluble crisis in Europe. In addition, the report cited the growing geo-political tensions related to Iran and neighboring countries, which are likely to further lower business confidence and economic activity. Moody's also believes that the risks in the credit sector will continue due to rising returns on corporate bonds challenging the ability to finance corporations.