Scope Ratings: Direct credit risks for Cyprus-Egypt due to Israel

Cyprus and Egypt currently face the most immediate credit risks than other countries rated by Scope Ratings due to the Israel-Hamas conflict, said the German credit rating agency.

In its report ‘Hamas attacks test Israel’s economic resilience; adds risk to regional stability, global growth’, the rating agency said that for now, the most immediate credit risks for sovereigns publicly rated by Scope are Egypt (B-/Negative Outlook), which is under heavy strains and shares a short border with Hamas-controlled Gaza.

But also “Cyprus (BBB/Stable), which depends on Israel for oil and gas supplies.”

Scope argued that Türkiye (foreign-currency rating: B-/Negative) may see its regional influence grow as it seeks to promote stability, similar to its role in the context of Russia’s war in Ukraine.

“In an adverse scenario in which an escalation of the Israel-Palestinian conflict to the regional level results in oil prices sustainably crossing $100 a barrel – compared with Brent crude, currently trading around $88/barrel – concerns about the global outlook for inflation and the response by central banks would grow, notes the agency,

“This could have negative repercussions for economic growth and sovereign ratings beyond Israel in the medium term,” said Scope.