Turkish-Israeli deal ‘credit positive’ for Israeli economy: Moody’s

The report also added that the reconciliation between the two countries would provide a firm basis for the development of the Israeli gas sector.

On June 28, Israel (A1 stable) and Turkey (Baa3 negative) signed an agreement that formally normalizes relations between the one-time allies. 

“The credit-positive accord supports the Israeli economy by expanding the market for its gas exports from the giant Leviathan offshore field, where development will soon begin following the Knesset’s recent resolution of various regulatory impediments, and we expect it will also bolster regional political stability,” said the note. 

Moody’s also expects the deal to bolster regional political stability. 

Perhaps more significant than the security advantages are the potential benefits for the Israeli economy, particularly for the incipient gas industry, according to the note. 

“Turkey is likely to become a primary market for gas exports from Leviathan – potentially through the construction of a new pipeline in the Mediterranean – now that the two countries are set to begin discussions about a gas deal. Turkey also provides an important route to European markets for exports from the eastern Mediterranean gas basin, and would allow Israeli gas to serve as an alternative to Russian gas, which is frequently used for political leverage in European-Russian disagreements,” said the note.