Moody's Investor's Service has downgraded Israel's credit rating for the second time this year, cutting it from A2 to Baa1, citing intensified conflict with Hezbollah and the economic costs of nearly 12 months of fighting in Gaza. The agency expresses concerns over heightened geopolitical and domestic political risks, predicting a slower economic recovery and increased public debt challenges. This downgrade follows a series of Israeli military actions against Hezbollah and reflects the ongoing economic strain resulting from the war. Moody's had previously downgraded Israel's rating from A1 to A2 in February, marking the first downgrade in the history of international ratings for Israel. All three major credit rating agencies have now lowered Israel’s ratings amidst the conflict, indicating potential for further downgrades if the situation worsens. Despite efforts by Israeli officials to assure Moody's of fiscal management, the agency remains skeptical about the government's ability to effectively address the economic fallout of the war.