Moody's Downgrades Israel Electric Corporation Amid Ongoing War
Moody's Investors Service has recently downgraded the Israel Electric Corporation's credit rating from Baa1 to Baa2, citing a negative outlook. This decision follows a prior downgrade of Israel's sovereign credit rating by two notches, indicating a broader concern about the country's economic stability. The downgrade reflects the financial stress on the electricity company, which is exacerbated by the ongoing war and significant operational costs associated with securing diesel fuel and protective materials.
According to reports from Calcalist, the Israel Electric Corporation has incurred expenses amounting to hundreds of millions of shekels in diesel fuel purchases since the conflict began, highlighting its critical role in maintaining energy security during emergencies. Although these expenditures underscore the company's importance to the Israeli economy, they have adversely affected its financial results. Moody's has emphasized that the corporation's debt is not government-backed, heightening the financial risks it faces.
Despite the recent sale of the Eshkol power plant for NIS 9.1 billion (approximately $2.38 billion), which bolstered the company's financial statements, Moody's warns that the electricity market may not sustain its current favorable conditions. The company is planning substantial investments, projected at about NIS 7 billion ($1.83 billion) annually, to adapt to these changing market dynamics.
